How To Invest In Gold In Stock Market

Gold as an investment has traditionally been a go-to option, considering the reverse trend it follows compared to the equity market. When stocks go down, gold demand typically increases, causing its price to rise. However, for many Indians, Gold means more than just making money. The problem arises when people try to use Gold for both personal reasons and as an investment. So, how can you invest in Gold through the stock market? This guide will explain the details of investing in Gold, including how to do it online and the returns you might get.

Advantages of Investing in Gold through Share Market

Sovereign Gold Bonds (SGBs)

• Ideal for long-term investment (5+ years).
• Offers regular interest payouts during the investment period.
• Tax-free redemptions after five years.
• Tax-free redemption at maturity (after eight years).

Short-Term Investment Considerations

• Physical and digital Gold may seem appealing for short-term investments, but they are not regulated.
• High buy-sell spreads lead to increased costs.
• Not recommended for tactical bets due to reduced returns after accounting for costs like GST and spread.

Gold Mutual Funds and Gold ETFs

• Suitable for short-term investment (up to 3 years).
• High liquidity and availability.
• Even after tax changes, they remain a better option for short-term investments or tactical bets in Gold.
• Other options incur high costs (GST + spread), making them less favourable.

How to Invest in Gold Online?

To begin investing in Gold online, you must: 

• Open an account with an online brokerage or a platform like INDmoney that provides choices for gold investments.
• Finish the required Know Your Customer (KYC) procedure.
• Add money to your account.
• Pick a gold investment strategy based on your requirements and level of risk tolerance.
• Watch the market closely and change how you handle your investments accordingly.

Ways to invest in Gold:

Jewellery as an Investment

Purchasing gold jewellery is common, particularly in India, where it is culturally significant. However, because of the manufacturing charges, jewellery can be expensive despite being prized for its aesthetic appeal and sentimental worth. This implies that if you sell it later, your profit margin might be smaller. Furthermore, the value of jewellery may not necessarily align with your financial objectives because personal preferences determine it. Thus, investors must consider the real-world implications of their jewellery investments.

Solid Gold (Biscuits/Bars/Coins)

You can also invest in Gold by buying solid things like bars, coins, or biscuits. They usually cost less than jewellery so they can be a wiser investment option. However, investors must consider the logistics of storing physical Gold securely and the theft risk. Despite these challenges, investing in solid Gold can offer good returns and liquidity when sold through reputable channels.

Gold Schemes (Saving Instruments)

Gold saving schemes are like regular saving plans where you put a set amount of money into a jeweller's scheme regularly. Over time, your money adds up, and when the plan ends, you can buy Gold at the current market price. While these schemes help you save for Gold in a disciplined way, it's essential to check the rules and ensure the jeweller offering the plan is trustworthy to have a good investment experience.

Digital Gold

Digital gold platforms are now available, making it easy to invest in Gold online. With these platforms, you can buy Gold in small amounts, even starting from just Rs.10, and keep track of your investments digitally. Genuine Gold backs your investment, and its price updates instantly. This means you can easily buy, sell, or convert your investments whenever you want. Also, since it's all digital, you don't have to worry about storing physical Gold or keeping it safe, which makes it an excellent option for many investors.

Sovereign Gold Bonds (SGBs)

Investing in SGB (Sovereign Gold Bonds) from the Reserve Bank of India gives people another option to invest in Gold. The government supports these bonds and offers a set interest rate, giving investors a chance to earn money as the value of their investment goes up and get regular interest payments.

Sovereign gold bonds do not have any visible expenses primarily because they are derivative products guaranteed by the government of India and are not backed by physical Gold. Given these factors, sovereign gold bonds are the most profitable way to invest in Gold. As with other investments, you need to consider the availability aspects. Availability aspects for investing in sovereign gold bonds include subscription periods, limits, market demand, redemption periods, and secondary market liquidity.

Conclusion

A thorough understanding of how gold operates is essential if you consider including it in your investment strategy. Don't forget to match your investing choices to your risk tolerance, investment horizon, and financial objectives. You can gain insight and make wise investing decisions by speaking with an investment advisor. By staying informed and choosing wisely, you can include Gold as part of your investments sufficiently. Visit the INDmoney guide for Investing in India for a broader perspective.