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Gold Investment Options

Traditionally, Indians have been buying gold in the form of jewellery, but just as a tradition and not for investment purposes. But this year gold has given astonishingly high returns (30% from year to date) and has been one of the best investment assets for the year. After this rally, many people are looking to invest in gold. So, here are some ways one can invest in gold with their comparison

Type Liquidity Charges Returns
Physical Gold Less liquid High making charges 5-20% + Gst Less returns due to lower resale value
Gold ETFs High Liquidity and volatility Expense ratio of 0.5 to 1% Comparatively higher than physical gold
Gold Mutual Funds Lower liquidity than ETFs Expense ratio of 0.2% to 1% and exit load of 1-2% Comparatively higher than physical gold
Sovereign Gold Bonds Locked In for 5 years. However, can be traded in secondary market. Nil Higher than gold market returns due to additional 2.5% returns PA

Now, which one to choose from above listed options depends on the needs of the investor. There are various factors to be considered, like the charges: a high charge percentage can eat up the gains from the investment. Gold is also eligible for indexation benefits if held for more than 3 years and is taxed at 20%. But capital gains from SGBs are tax-exempt if held till maturity(8years). However, SGBs provide very less liquidity. If an investor is looking for a more liquid option to invest in gold, then Gold ETFs and Gold funds should be considered.