Sunday Special: Should you invest in Gold? Part 2
Last week, we discussed why gold doesn't seem like a very good investment in terms of the return offered. Today we'll explore which instruments can you hop into for investing in Gold and making the most out of it!
If you’re considering investing in gold you can consider the following modes of investment:
Physical or Digital gold: Though it is most comfortable, there is 3% GST on the purchase- as good as 3% capital loss! The price also may vary across sellers. Seller A may sell at ₹ 40,000. But seller B may sell at ₹ 39,000.
Gold ETFs/ Mutual fund: There is no GST and pricing is super transparent. If you have Demat, ETFs are better. If not, gold mutual funds are a way to go.
Tax: All above are taxed similarly to debt funds. Only Gold bonds have different taxes.
Sovereign Gold Bonds: If you are in it for the long term, these bonds give you an additional 2.5% return per year. But it has a lock-in period of five years. If you hold it for eight years, the gains are tax-free! Also, you can take a loan against the gold bond.
If you are looking to invest in the long term, Sovereign gold bonds are a place to invest. For a short time, Gold ETFs are the right place to invest.
So is it a great investment? Data doesn't say so! To hedge risks, it makes sense to invest in gold with a small allocation ( less than 10% of the total portfolio).
Cheers!
Sunday Motivation:
“Act as if what you do, makes a difference. It does.” — William Jones
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