Dhanteras is the first day that marks the festival of Diwali in India, which observed to celebrate wealth and prosperity.
On Dhanteras, Hindu devotees consider buying precious metals, especially gold, as auspicious, which is why people queue up at gold shops to buy ornaments, bars and coins.
However, investing in physical gold has its own set of disadvantages like storage hassles, security, no yield and high making charges in case you are purchasing jewellery. So, be wiser and buy gold the following ways in order to make the most of your money:
Gold ETFs: Gold Exchange-Traded Funds (ETFs) invest primarily in physical gold with each unit typically representing 1gm of gold. ETFs trade on the cash market of stock exchanges, like any other company stock and can be bought and sold continuously at market prices. Investing in them serves dual benefits as one is not just investing in gold but also getting the flexibility of trading it in the form of stocks. For investing in gold ETFs, you need demat and trading accounts. If you don’t have these accounts, then you can also go for gold funds.
Gold funds are open-ended mutual funds mandated to hold the units of gold ETFs. Investors buy units of the gold funds, just like any other mutual fund, and these funds invest in the units of the gold ETFs to give investors similar exposure to gold.
Gold bonds: Sovereign gold bonds are government securities denominated in multiples of gram(s) of gold. The investors in the gold bond scheme are compensated at a fixed rate of 2.5% interest per annum payable semi-annually on the nominal value. The tenor of the bond is 8 years with an exit option after the fifth year to be exercised on the interest payment dates.
Along with the 2.5% interest, investors also earn returns linked to gold prices. Minimum investment in these gold bond schemes is 1 gram, while maximum investment has been set at 4 kg for individuals, 4 kg for HUF and 20 kg for trust and similar entities per fiscal year. The bonds can be bought from banks, stock exchanges, designated post offices and other notified sources.
Currently, the series-VI of the sovereign gold bond scheme 2019-20 is open for subscription till 25 October at the price of Rs 3,835 per gram.
Digital gold: Digital Gold is a simple and transparent way to buy and sell gold instantly. Mobile wallet providers such as Google Pay, Paytm, Mobikwik and PhonePe have started offering digital gold on their platforms in partnership with MMTC-PAMP. You can buy up to 99.99% 24 karat gold from these apps in denominations of as low as Re1.
The gold purchased of any value will be stored on behalf of the user in secure vaults without a charge or at nominal cost. One can keep gold for maximum of five years. However, after five years, you are required to either convert it into gold coins or sell it.
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