TomorrowMakers

While most women would love to have gold of their own, not all of them want to wear it. You can purely look at gold as an investment too

Gold investments

Gold has always been a much-coveted possession for Indian women. However, for financially independent women, gold is not just a piece of jewellery to flaunt. It can be much more than that; for instance, you can buy gold as an investment option. 

From gold monetisation schemes to gold exchange-traded funds to digital gold, today there are numerous vehicles to invest in the yellow metal.

Let’s look at some investments options that use your favourite metal to add to your wealth.

  1. Gold Monetisation Scheme

What is it?

A gold monetisation scheme is essentially a gold savings account that gives you interest for the gold you deposit in it – be it jewellery, bars or coins.

Things to keep in mind:

  • It is important to check the purity of the gold you deposit.
  • You will need to submit a purity certificate to the bank and fill out a few Know Your Customer (KYC) formalities.
  • Banks usually offer 2% interest calculated on the weight of your gold, at the end of tenure.

For example:

Your deposit = 100 gm of gold

Amount of gold at the end of tenure = 102 gm of gold

The minimum lock-in period for a gold monetisation scheme is one year and the minimum amount of gold you can deposit is 30 grams.

You can redeem the amount either in the form of physical gold or money.

What are the benefits?

If you own gold jewellery that you don’t wear often, or coins, bars, statues, etc. as part of your family heirloom, that are simply gathering dust in a locker, you can use it as part of gold monetisation scheme which allows you to:

  • Earn an interest on your gold without worrying about safeguarding it.
  • Save tax as this interest is exempted from capital gains tax, wealth tax, and income tax.

2. Gold Exchange Traded Funds (ETFs)

What is it?

It is an exchange-traded fund, in a paper or dematerialised (Demat) form that aims to track the domestic price of physical gold. Gold Exchange Traded Funds are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE).

Things to keep in mind:

  • One Gold Exchange Traded Fund unit = 1 gram of gold.
  • Every Gold Exchange Traded Fund unit is backed by 99.5% pure physical gold.
  • Trading takes place electronically, through a Demat account and a broker.
  • A brokerage fee and minor fund management charges are applicable while buying gold ETFs.
  • On redeeming, you don’t get physical gold but the cash equivalent.

What are the benefits?

Gold Exchange Traded Funds are an electronic, hassle-free manner of investing in gold.

  • You do not have to worry about safeguarding physical gold.
  • No premium or making charges apply here.
  • You also get tax benefits like no wealth tax, VAT, security transaction tax, or sales tax.
  • ETFs are also accepted as collaterals for loans.

3. Gold Accumulation Plan

What is it?

Also known as gold investment scheme, it allows you to invest in gold through regular monthly installments.

Things to keep in mind:

  • A gold investment scheme’s tenure ranges from one year to 15 years.
  • The minimum monthly subscription is Rs. 1,000.
  • This scheme splits the monthly subscription into equal parts and accordingly, allots you the physical gold equivalent (rounded up to 4 decimals) bought over 20 successive business days.
  • A unique Customer ID enables you to see a daily or monthly statement.
  • A gold investment scheme is fully backed by physical gold, which is stored by an agency or jeweller.
  • Along with each subscription, you will be required to pay an administration charge of 1.5% added to the daily gold price.   
  • You can redeem your gold in the form of coins, bars or jewellery (all charges and tax will apply).

What are the benefits?

A Gold Accumulation Plan or gold investment scheme is a good investment option if you are looking to buy a large amount of gold for weddings, anniversaries, birthdays, etc. This scheme makes a big gold purchase easier as it follows a disciplined approach, so that you do not find your pockets emptied suddenly.

4. Digital Gold

What is it?

PayTM is the first provider to come up with the concept of digital gold in India. It allows you to buy and sell gold through a mobile wallet. This process involves three parties – you, the digital provider and the company that safeguards your physical gold.

Things to keep in mind:

  • You need to fill out a few KYC details and open an account under a Gold Accumulation Plan (GAP).
  • You can buy and sell digital gold based on current gold prices.
  • You need to make at least one transaction (buy or sell digital gold) once in six months.
  • Tenure of the plan is five years.
  • You can withdraw your gold by specifying the quantity and denomination. The gold will be delivered to your address after you pay the making and delivery charges.
  • You have to redeem your gold at the end on the tenure.
  • NRIs are not eligible to buy digital gold.

What are the benefits?

If you are a tech-savvy woman who would prefer buying gold with a few clicks on her phone, then digital gold is a good option for you. It guarantees 24K (99.99% pure) gold.

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