India and gold are closely related in sentiment, security, and culture, and their relationship goes far beyond money. In Indian households, gold has always been important for everything from weddings and festivals to inheritance and savings.
It is estimated that Indian families own nearly 25,000 tonnes of physical gold, which is more than the combined holdings of the world’s top 10 central banks. That proves that we have faith in the yellow metal.
Despite gold’s sentimental and traditional value, there are a few important considerations when thinking of it solely as an investment.
In addition to the cost of the metal itself, buying gold coins or jewelry involves extra costs and risks.
Here’s Why Buying Gold Jewelry Isn’t Really an Investment:
- Making Charges Cut Returns
Gold jewelry carries 10–30% making charges that aren’t recovered when you sell plus jewelers may offer less than market rate, reducing your returns. - Storage & Safety Risks
Keeping gold safe isn’t free; bank lockers cost money, and storing it at home risks theft or loss. - Purity Concerns
Without BIS hallmarking, you risk getting lower-quality or adulterated gold. - Not Always Liquid
Selling gold jewelry quickly at a fair price can be tough; you may have to settle for less or wait longer to find a buyer.
Gone are the days when you needed coins or jewelry to own gold. Today, you can invest in gold without ever touching it yet still capture every bit of its value.
Gold Mutual Funds
If you prefer the mutual fund route, you can also invest in Gold Mutual Funds another way to gain exposure to gold without actually owning it.
Key Features of Gold Mutual Funds
- Indirect gold exposure: The funds invest in gold-related assets, such as gold ETFs, and do not involve the physical storage, insurance, or purity concerns of owning physical gold.
- Professional management: Experienced fund managers handle the portfolio, making investment decisions based on market trends and gold prices, which simplifies the investment process for the individual.
- Low investment threshold: Investors can start with a small amount, such as ₹100 or ₹500, making them accessible to a wider range of investors.
- Flexible investment options: You can invest either a lump sum amount or set up a Systematic Investment Plan (SIP) to invest a fixed amount at regular intervals.
- Portfolio diversification: Adding a gold fund to your portfolio helps diversify risk and acts as a hedge against inflation or market uncertainty, since gold often moves differently from equity and debt markets and tends to hold its value during economic downturns.
Example:
Suppose you invest ₹1,000 in a Gold Mutual Fund.
The fund uses this money to purchase Gold ETF units.
As gold prices fluctuate, the value of your investment changes. When you redeem, you receive the NAV (Net Asset Value) of your holdings at that time in cash.
Gold ETFs (Exchange-Traded Funds)
A Gold ETF lets you invest in gold without buying or storing it physically. You purchase units online each representing a small quantity of 99.5% pure gold just like stocks. As gold prices move, so does your investment’s value. You can start small, invest via SIP, and buy or sell anytime through your Demat account.
Key Features of Gold ETFs
- High Purity: Each Gold ETF unit represents 99.5% pure physical gold, ensuring quality and standardization.
- Exchange-Traded: Easily bought and sold on NSE and BSE during market hours, just like shares.
- Demat Holding: Units are stored electronically in your Demat account no worries about safety or storage.
- Uniform Pricing: Enjoy consistent pricing across India, unaffected by local market variations.
- High Liquidity: You can buy or sell anytime the markets are open, offering quick access to your investment.
- Low Costs: Pay only minimal brokerage and fund management fees, no making or storage charges.
- Transparent: The NAV and gold holdings are disclosed daily, ensuring complete visibility for investors.
- Convenient: Investing, tracking, and redeeming Gold ETFs is fully online and hassle-free.
Gold will always have a special place in Indian hearts but you no longer need to buy jewelry or store coins to benefit from its value. Gold ETFs and Gold Mutual Funds let you invest smartly, track prices transparently, and stay free from purity or storage worries.
They’re perfect if you want to add a golden touch of diversification to your portfolio without the extra weight in your locker. You can check Lxme’s gold mutual fund and begin investing in gold with just Rs 100
FAQs
How much of my investment portfolio should I allocate to gold?
Experts generally suggest allocating 10–15% of your investment portfolio to gold, but this should be based on a well-designed financial plan that considers your goals, time horizon, risk tolerance, and overall portfolio mix.
How do I start investing in gold online?
Download the Lxme app and explore gold mutual funds available on the platform. These funds invest in gold smartly so you don’t need to worry about storage, safety, or purity.
How do Gold ETFs differ from Gold Mutual Funds?
Gold ETFs are traded on the stock exchange and directly track the price of gold, which means you need a demat account to invest in them.
Gold Mutual Funds, on the other hand, invest in Gold ETFs and do not require a demat account. Through Lxme, you can easily invest in Gold Mutual Funds, making it a simpler and more convenient option for beginners.
Are there any tax benefits of investing in gold?
No, Short-term gains on both Gold ETFs and Gold Mutual Funds are taxed as per your income-tax slab, while long-term gains are taxed at a flat 12.5% applicable after 12 months for Gold ETFs and after 24 months for Gold Mutual Funds (no indexation in either case).
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Comment ‘Gold’ if you wish to invest in a Gold mutual fund with Just Rs 100.
Further read:
Expert Tips on How Much of Your Portfolio Should Be in Gold?