The World Gold Council (WGC) anticipates 700-800 tonnes of gold demand in 2024. Thanks to India’s strong macroeconomic environment, investing in gold has been a popular strategy for preserving wealth. To invest in gold, investors have several options, ranging from traditional methods like buying physical gold to modern avenues like gold ETFs, sovereign gold bonds (SGBs), and digital gold. Let us understand the different ways to invest in gold, learn about some popular gold funds, and check the documents required to invest in gold.
What are Sovereign Gold Bonds (SGBs)?
Sovereign gold bonds are government-issued securities denominated in grams of gold. They offer a safe investment alternative to physical gold. That’s because they provide the benefits of gold investment without the storage hassles.
Additionally, investors earn a fixed annual interest rate (2.5% at the time of writing this article) on their gold investments. Upon maturity, investors receive the “current market value” of gold.
Furthermore, investors must note that:
- All the SGB schemes have an eight-year tenure
- There is an option to exit after the fifth year
- SGBs are also eligible for capital gains tax benefits
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Some of the gold funds in India
Gold mutual funds offer an efficient way to invest in gold. As with SGBs, they also eliminate the need for physical ownership. Let’s have a look at some top gold mutual funds in India 2024:
- HDFC Gold Fund
- Deals with 99.5% quality gold
- Aims to match returns from investing in physical gold
- ICICI Prudential Gold Fund
- Invests in real gold and gold-related products
- Tracks local gold prices closely
- Nippon India Gold Savings Fund
- Invests in gold bars and related products
- Exposes investors to real gold price changes
- Aditya Birla Sun Life Gold Fund
- Invests in gold bars and assets
- Mirrors gold price performance
- DSP BlackRock World Gold Fund
- Invests in stocks and equity assets of global gold mining businesses
- Provides exposure to the gold mining sector
- Kotak Gold Fund
- Invests in gold bars and related assets
- Matches real gold returns
- Invesco India Gold Fund
- Invests in gold bars and related products
- Tracks gold price changes
- Axis Gold Exchange Traded Fund
- Deals in real gold
- Matches local gold prices closely
- SBI Gold Fund
- Invests in gold bars, gold-related assets, and stocks related to gold mining and research
- Provides diversified exposure to the gold industry
Do you want to invest in shares of publicly listed companies? Read how you can do so via equity markets.
What documents do you need to invest in gold?
With several ways to invest in gold, the required documents also depend on the investment method chosen. Let’s see what documents you will need:
- When buying physical gold
- For investments above Rs. 2 lakhs, you are required to provide PAN Card details.
- This rule came into effect on January 1, 2016, and applies to all modes of payment.
- Gold ETFs (Exchange Traded Funds)
- Brokerage account
- You need to open an account with a brokerage firm
- In most cases, you are required to submit the following proofs of identity:
- Aadhaar Card
- PAN Card
- Voter ID
- Passport
- Proof of address
- Demat Account
- Next, you will have to open a Demat account with the same brokerage firm
- You will hold all the ETFs in this demat account
- Documents for this step are the same as those above
- Brokerage account
- Sovereign gold bonds (SGBs)
- You will be required to complete your Know Your Customer (KYC) verification.
- The documents required for purchasing SGBs are the same as for Gold ETFs.
- Aadhaar Card
- PAN Card
- Voter ID
- Passport
Also read: How can you trade in gold
Why should you prefer investing in gold?
Investing in gold offers several advantages, making it a preferred choice for many investors. Let’s see why investors prefer gold:
- Gold is a reliable hedge against inflation and economic instability
- It preserves wealth during market volatility
- Gold’s intrinsic value and global acceptance ensure liquidity and allow easy conversion to cash when needed
- Gold also diversifies investment portfolios and reduces the overall risk
- When assessed historically, gold has delivered consistent returns to investors
The bottom line
Among Indians, investing in gold remains a popular and strategic choice. It helps preserve and grow wealth. With the anticipated 700-800 tonnes demand in 2024, India's strong macroeconomic environment supports various gold investment options.
Whether opting for traditional physical gold or modern avenues like gold ETFs, sovereign gold bonds, and digital gold, investors have several ways to invest in gold and benefit from its stability and growth potential.
To physically invest in gold, you must submit your PAN Card details. On the other hand, when opting for ETFs or mutual funds, you must complete your KYC verification (PAN, Aadhaar, Voter ID, Passport) and open a Demat account.
Interested in commodities? Learn how you can trade commodities online.
