How to Invest in Gold in India

Gold has been a commodity much valued since the dawn of civilization. Few countries value Gold as much as India does. In India, Gold is deeply related to tradition and belief hence Indians like to stockpile the precious metal. Since the scarcity of the metal is eminent, the price of Gold is predicted to rise in the future. We can safely assume that investing in Gold is a good idea. However, when investing in Gold, a lot has to be kept in mind to ensure the best returns.

Get over taboo

Even today, for most Indian families Gold, is considered inheritance rather than investment.  Investment in Gold should be considered as a financial investment instead of traditional stockpiling.

Know your Gold

When you invest in Gold you do not necessarily buy Gold jewelry as assets. There are 2 forms of investment vehicles, Physical Gold and Paper Gold/Electronic Gold –

  • Physical Gold –
    • Bars
    • Jewelry
    • Coins
  • Paper Gold/ Electronic Gold –
    • Exchange-traded funds (ETF)
    • Gold Funds
    • Shares in Gold mining companies

Prefer paper gold over physical gold

Most of us may count on physical Gold while investing but it poses a lot of problems when it comes to storage and safekeeping. Hence we see that the best form of Gold is Paper Gold/Electronic Gold. The electronic form of Gold may help you save up on making charges, value added taxes, and locker charges. It also makes transfer easy and safe.

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Make early investments

Since demand for gold is bound to increase in the future, the price of gold is sure to rise. As the price of gold is bound to rise, so there is no way that your returns will be less than your investment. But if you decide to buy gold in the future, you may have to invest more to get the same amount you could get for a much less price right now. Hence we see that time plays a key role in investment in gold. Keeping a track of the price of Gold can help you determine the best time to invest in gold.

Know how much to invest

In most countries, it is suggested that only 5% of one’s investment portfolio should be invested in gold. Yet we see that in India the investment ideally should be 10%-20% of one’s investment portfolio. Investing more than that might prove to be risky but investing too less might prove to be foolish. Hence it is important to calculate and invest a part of your portfolio.

Beware of scams

Investment has its fair share of risks, but when it comes to gold you should be extra cautious. When investing in gold it is very important to be sure of the quality of gold that you are investing in. There have been cases of counterfeit gold coins being sold.

Choose your investment plans

You may boldly invest a lump sum amount on gold or you can go for monthly investment plans. Many people take loans just to invest in Gold which adds to assets and helps pay-off the loans. You may choose to not block a large sum of money and invest monthly in National Spot Exchange Limited’s E-Gold or Gold mutual funds.

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Wait for returns

Be sure to hold on to your asset as long as you can. The longer you hold on to your investment the better the return will be, since the rate of gold is sure to become sky high in the near future.

How to Invest in Gold in India

  • You must first overcome emotional and traditional values and appreciate Gold as a financial asset.
  • Before investing in Gold you must know all the forms in which Gold is offered.
  • It is necessary to choose the form of Gold you wish to invest in. Investing in paper or electronic Gold is always a better idea.
  • The investment must be made when the price of Gold is low. This ensures a higher rate of return.
  • You should be sure of the amount of risk you are willing to take and dedicate a percentage of your investment portfolio accordingly.
  • While investing be sure of the quality of Gold that you are investing in. Beware of fraudulent investment scopes.
  • Do not pour in all your money and assets into the investment, choose your investment plan wisely.
  • Be sure to hold on to your asset till you get the best possible returns.

Gold investment in India, good or bad?

In India selling Gold is no longer a sign of poverty, it is a very smart financial move. In a country where the commodity has such great value, it is sure to be an excellent investment. But one must keep it as a hedge against inflation instead of investing solely in Gold. So when you invest in Gold make sure to make smart decisions.

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Further Reading: Bank Rate, Rediff, Wikipedia

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Mani Karthik

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Mani Karthik

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2 responses to “How to Invest in Gold in India”
  1. Mani Karthik

    Great to know Prudhvi. Thanks.

  2. prudhvi

    Gold really creates wealth in the form of returns if invested systematically which requires expertise analysis. I’m trading in Commodity Markets particularly Gold taking the service from #SquareIndia Advisory Pvt Ltd. They helped me to get better returns even market is in bad condition too. They provided Live and Local Bullion Rates too. In order to earn better returns have a look #SquareIndia Advisory Pvt Ltd.

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