Once dominated by jewellery, coins and bars, gold investment in India is rapidly moving into the digital and market-linked space, offering investors high returns without the need to hold physical gold.With the festival season of Dhanteras and Diwali approaching, investors looking for pure returns rather than physical ownership now have multiple options, including digital gold, gold ETFs, gold mutual funds, and sovereign gold bonds (SGBs). These instruments provide liquidity, easy redemption, and the ability to invest from as little as Re 1, according to an ET report.
Digital gold
Digital gold allows investors to buy and sell gold online, tracking its market price, without incurring making or storage charges. Platforms such as Tanishq, MMTC-PAMP, and PC Jeweller allow investors to convert their holdings into physical gold if desired.Investors can trade 24/7 and redeem their holdings the same or next business day. The ease and accessibility of digital gold make it an increasingly popular option for urban investors.
Gold ETFs
Gold Exchange-Traded Funds (ETFs) provide exposure to physical gold via the stock market. Traded like shares, these funds require a demat account and can be bought or sold during market hours.“For investors looking for gold exposure, gold ETFs are the most efficient option as they avoid major costs associated with physical gold, such as storage, hallmarking, insurance, making charges, and wastage,” said Chirag Muni, Executive Director at Anand Rathi Wealth Limited, quoted ET.“ETFs provide greater flexibility, higher liquidity, and minimal expense costs, making them a more efficient choice for long-term wealth allocation,” he added.Nippon India ETF Gold BeES, India’s oldest gold ETF, has delivered 950% returns since its 2007 launch, turning a Rs 10 lakh investment into over Rs 1 crore.
Gold mutual funds
Gold mutual funds invest indirectly in gold through units of gold ETFs. They allow investors to make lump-sum or SIP investments while avoiding direct holding of the metal.These funds carry slightly higher expense ratios than ETFs, so returns may be lower. Over the past decade, ABSL Gold Direct Plan has generated 15.86% annualised returns, turning Rs 10 lakh invested 10 years ago into over Rs 44 lakh.
Sovereign Gold Bonds
SGBs are RBI-issued government securities backed by 999 purity gold. They have an 8-year maturity period, with early redemption allowed after five years. Investors earn 2.5% annual interest in addition to gains from gold price appreciation.While no fresh SGBs are currently being issued, they can be purchased from the secondary market. SGBs are seen as a secure investment that combines income generation with gold exposure.
Why digital options are gaining ground
Rising gold prices, surging festive demand, and the convenience of online platforms are encouraging investors to diversify into digital and market-linked gold instruments.Experts say that for long-term wealth creation, ETFs remain the most efficient option due to their high liquidity, flexibility, and lower costs. Meanwhile, mutual funds and SGBs offer alternatives for different risk profiles, while digital gold allows instant, small-scale investments.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
