In recent time during the COVID -19 phase, we have seen a huge fall in the stock market considering investment in shares, mutual funds, F.D but the only asset which was a bit stable was GOLD.

GOLD – One of the most preferred asset in India, gives a sense safety & security, its an international asset i.e can be exchanged all over the world. Gold is considered as a hedge against inflation & currency risk.

Some of the features makes gold an attractive investment option which are

1. Safety

2.  Liquidity

3.  Competitive return compared to other financial assets ,

4. Growth in line with the inflation.   

Since years people have been knowing only about the purchase of gold in the physical form but now new modes of investment in gold are also available about which some of the people are still not aware they go for physical purchase only.

Gold

The Various modes of Digital Gold are

Sovereign Gold Bonds
Gold E.T.F
Gold Funds 

SOVEREIGN GOLD BONDS

Sovereign gold bonds are issued by the R.B.I on behalf of Government, the act as a substitute for physical gold. These bonds are dominated in grams of gold, these bonds are preferred as the risk & the cost of storage is eliminated than keeping in physical form.

ELIGIBILITY – Person who is resident in India. Eligible investor includes Individual, H.U.F, Trust, charitable institutions. If the residential status of individual changes subsequently than he/she shall continue to hold these bonds until maturity. Joint holder & minor through guardians are also allowed to invest.

INVESTMENT LIMIT  As these bonds are issued in denomination in 1 gram of Gold therefore the minimum limit is 1 gram and the maximum shall be 4 kg of gold for individual & H.U.F, 20 kg for trust & similar entity. This limit of 4/20 kg is on per year basis.

RETURNS – The bonds gives interest @2.5% per annum. The amount shall be credited in the bank account quarterly. On maturity the amount shall be paid based on the average price of the previous 3 working days.

MATURITY – The bond holds a tenure of 8 years, premature withdrawal is allowed after the 5th year can be sold on exchanges if held in demat form.

TAX ADVANTAGE – Interest received during the holding period shall be taxed as per income-tax laws but the capital gain which arises on redemption of these bonds after maturity is EXEMPTED from taxation.

These bonds are issued in set of series and the upcoming series will be issued in August 2020, these bonds are attractive as they are issued by government and so gives a sense of safety to the public.

GOLD E.T.F 

E.T.F ( Exchange Traded Fund) – these are commodity based mutual funds. As the name says GOLD E.T.F i.e the commodity here is Gold, this is an another means of investing in gold rather than in physical form.

Investment in gold E.T.F is ideal for all types of investor, as it can be purchased in the smallest denomination of 1 unit = 1 gram of gold. There is no entry or exit load while investing through E.T.F.

GOLD FUNDS

GOLD FUNDS are the schemes offered by the mutual funds which further invest in gold companies, an investor can diversify risk by investing in gold & eliminate the risk of investing in physical form.

Investment in these funds do not require a bigger amount it can be as low as Rs 500/ through SIP mode. Gold funds offers liquidity i.e their amount can be disbursed with 2-3 days. The investment can be done in physical mode as well as through demat account.

This gold is an asset which every investor should have in its portfolio, as it gives diversification, liquidity, growth, security & is a hedge against inflation.

These are various modes of investing in gold further we will be discussing various other financial instruments one should have in his portfolio.

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Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

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Qualification: Graduate
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Location: AGRA, Uttar Pradesh, IN
Member Since: 24 Jul 2020 | Total Posts: 16
I have Cleared CA (intermediate) also cleared various series conducted by N.I.S.M (National Institute of Securities Market), Investment Advisory, Research Analyst, Merchant Banking & Retirement planning. Recently cleared exam of Independent Director conducted by IICA ( Indian Institute Of Corporate View Full Profile

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