As Dhanteras approaches, many investors look for gold as a reliable asset. While digital gold has gained popularity, paper gold is another viable option for those seeking to invest in gold without the hassles of physical storage.
Paper gold represents gold in a non-physical form, allowing investors to benefit from gold price fluctuations while enjoying liquidity and safety.
These include Gold Exchange Traded Funds (ETFs), sovereign gold bonds, and gold mutual funds.
Paper gold provides the benefits of gold investment—such as price appreciation and easy buying/selling—while minimising the risks and costs associated with physical gold.
How to buy paper gold
Invest in Gold ETFs
Gold ETFs are funds that invest in physical gold and are traded on stock exchanges like regular shares.
Here’s how to invest in them:
Open a demat and trading account: You need a demat and trading account with a registered stockbroker to buy gold ETFs.
Research available ETFs: Look for popular gold ETFs, such as Nippon India Gold ETF, HDFC Gold ETF, or ICICI Prudential Gold ETF. Compare their performance, expense ratios, and liquidity.
Place an order: Once you’ve chosen an ETF, place an order through your trading account. You can buy units at market prices, which fluctuate throughout the trading day.
Buy Sovereign Gold Bonds (SGBs)
Sovereign Gold Bonds are issued by the Reserve Bank of India (RBI) and are a secure way to invest in gold. Here’s how to buy them:
Currently, SGBs are available on stock exchanges. The minimum investment is typically one gram of gold.
Once your application is processed, you’ll receive the bonds in your demat account, representing your gold investment.
Gold mutual funds
Gold mutual funds invest primarily in gold ETFs and provide an indirect way to invest in gold. Here’s how to proceed:
Choose a Fund: Research various gold mutual funds, such as HDFC Gold Fund or SBI Gold Fund. Check their performance, expense ratios, and past returns.
Invest through a distributor or online platform: You can invest directly through the mutual fund’s website or through platforms like Groww or Zerodha.
Lump sum or SIP options: You can choose to invest a lump sum or set up a Systematic Investment Plan (SIP) for regular investments.
Benefits of buying paper gold
Liquidity: Paper gold can be easily bought and sold, offering flexibility for investors.
No storage concerns: Unlike physical gold, paper gold does not require storage, eliminating related costs and risks.
Interest income: Sovereign Gold Bonds offer an interest rate (currently 2.5% per annum).
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