Gold Investment articles

Best ways to invest in gold in 2021 in India

3 Mins read

Gold is the most ancient and primary mode of the transaction between mankind and kingdoms. It is a metal that holds great value and worth, for it is a mode we have always relied on. Over the past years, gold has traditionally secured a place in all households in some or another way, for example, in the form of jewellery, coins, gold bars, etc. Today there are many ways to buy gold. In this article we have listed 3 best ways to invest in gold in 2021, which are investment centric and have minimum to zero hassles.

best ways to invest in gold

Tracing back to the times of the rule of kings in India, India was called the “SONE KI CHIDIYA”, which completely signified the importance and abundance of gold in our country.

While the world is taking a digital turn and everything is being available at the command of your hand, of course, there ought to be a change in the investment industry too. Companies and investors are looking for a dynamic digital change in the realms of liquid investments.

This article will brief you about the best ways to invest in gold, how to make a direct investment in gold, and the most important question that would occur to your mind why you should invest in gold.

Why Should You Invest in Gold?

Investors benefit from gold’s role as a diversifier amid increasing budget deficits, inflation and potential market corrections from already high equity valuations.

Gold is a strategic asset

It has generated long-term positive returns in both good and bad economic times

gold returns compared to other assets for best ways to invest in gold

Gold beats inflation

The average annual return of 11% in rupees over the past 40 years, has outpaced the Indian and world consumer price indices (CPI). In years when inflation was higher than 7%, gold’s price increased 11% per year on average.

gold in the period of inflation for best ways to invest in gold

Gold outperforms fiat currencies

gold price compared to other currencies for best ways to invest in gold

Gold as a diversifier

Gold is different in that its negative correlation to equities and other risk assets generally increases as these assets sell off

performance of portfolio after adding gold to it

Overall, analysis suggests that adding between 6% and 20% of gold to a Indian-rupee based portfolio could make a tangible improvement to performance and boost risk-adjusted returns in long term

What are the various Gold Investment Options Available in India?

Our previous blog extensively discusses the various gold investment options available in India and their advantages and disadvantages. Read here

We list here all the gold investment options in India.

  • Gold coins and bars
  • Digital Gold
  • Gold futures and options
  • Gold ETFs & funds
  • Sovereign Gold bonds

The best ways of investing in gold?

We have shortlisted these ways based on the factors such as:

  • Ease of Investment
  • Minimum amount required to invest
  • Liquidity

1. Digital gold

Digital Gold allows investors to buy physical gold online, have it stored in professional vaults and get it delivered if the need arises. It offers investors a highly convenient way to benefit from the ownership of physical gold. Every smallest amount of digital gold you own is backed by physical gold by the seller. They buy it for you, store it for you and deliver gold coins and bars to you when you want.

Digital gold ranks high on our list simply because it qualified all the criteria: you can easily buy it through app (like GoldLane) by paying through payment wallets; the minimum amount required is ₹1; you can sell it anytime, from anywhere with a click which makes it highly liquid.

mobile phone showing goldlane app homescreen and gold coins stacked

2. Gold ETFs

The gold is kept in Demat (paper) format.
You can actually buy and sell gold ETFs on the normal stock exchange using your existing trading account. Like in case of shares, these Gold ETFs will get credited or debited to your demat account and has no lock-in requirements.

Why this format ranks second in the list is because it’s not easy to transact, you need to have a demat account and a broker. The brokerage charges are extra plus ETF tracks NAV and not the actual gold price. Physical delivery of gold is difficult.

gold etf

3. Sovereign Gold Bonds

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. You get 2.5% interest and they have a lock in period of 8 years.

We have listed SGBs third because of the low liquidity. Your gold will be locked in for 8 years and can’t be used if needed earlier.

sovereign gold bonds

Conclusion

The form you select depends upon your Investment goal. If your purpose of gold Investment is to convert accumulated gold into jewellery then go for digital gold. If you want to add gold solely as a investment then go for digital gold or gold ETF. If you want to track live gold price and invest accordingly then go for digital gold. If liquidity is not an issue then go for SGBs.

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