Gold Investment in India

Ancient India was famously known as the Golden Sparrow of the world because of the knowledge in various fields and the plethora of wealth possessed by the land. Being an auspicious and expensive metal, gold has been in the Indian culture for many centuries. Gold has been the favorite metal when it comes to investment amongst investors due to various factors such as inflation-beating power, high liquidity, etc., and hence because of its major popularity, investments in gold can be done from various platforms in different forms.

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We are rated^~

7.7 Crore

Registered Consumer

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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

Let us discuss various forms of investments in gold like physical gold, gold funds, sovereign gold bonds, digital gold, etc. in detail for a piece of better knowledge and understanding.

Reasons to Invest in Gold in India

A normal investor looks for 3 major things before investing in any kind of investment, that is:

Profitable returns
Maximum safety, and
High-liquidity

India and its fetish for gold for ages is no hidden truth. Even though Indians need no solid reason to invest in gold, still here are some important reasons one can keep in consideration of investing in gold:

Gold holds a significant place in India’s culture with eternal value and a significant way of preserving wealth.
It is one of the safest ways of investing.
It is good for portfolio diversification as gold is very different from other asset classes.
It is known as a crisis commodity as it mostly performs well no matter what the inflation rate is.
Gold offers excellent liquidity and flexibility to investors.

Types of Gold Investments in India

With the digitalization and recent developments in the financial market, there are various ways of investing in gold apart from buying physical gold. Here are the following ways one can choose to invest when it comes to gold:

Physical Gold

The cliché way of investing in gold is the physical form of investment. Physical gold can be bought in many forms like gold coins, jewelry, ornaments, bullions, etc. which are considered as the purest form of gold. These are considered the best kinds of investment as there is no adulteration and can be sold at any point in time.

The only issue that the physical form of gold rises is the constant vigilance and hence need to be kept in an extremely safe and secure environment. Keeping physical gold safe is a matter of concern and this is the main reason investors have started putting their money in other forms of gold investment.
Sovereign Gold Bonds

Substitute for physical gold, Sovereign Gold Bonds are government securities designated in gold grams issued on behalf of the Government by the Reserve Bank of India. The terms and conditions are regulated from time to time by the RBI (Reserve Bank of India) making it a safe and secure investment. The subscription of SGBS (Sovereign Gold Bond Scheme) is pre-announced by the Government through the press release and hence can be bought only during that window.

As per the RBI rules, all applications for the purchase of SGB must be attached with the individual’s PAN Card number issued by the Income Tax Department to make it authentic and safe from any type of forgery.

The minimum investment needed to purchase the SGBs is 1 unit, that is, 1 gram of gold. The maximum however varies from one entity to another, that is,
- 4 kilograms for individuals
- 4 kilograms for Hindu Undivided Family (HUF)
- 20 kilograms for trusts and similar other entities
- 4 kilograms applied to 1st applicant in the case held jointly

Documents Required to Invest in Gold

Following important documents are required in different forms of investment when it comes to gold:

PAN Card, if the transaction is above Rs. 2 lakhs while purchasing physical gold
Account and Demat account with the same brokerage firm while investing in ETFs (Exchange Traded Funds)
KYC documents along with Aadhaar card, PAN Card, etc. while investing in Sovereign Gold Bonds

Bottom Line

Each and every kind of investment comes with its own risks and returns. Investor needs to understand their personal needs and requirements, their future goals, their assets, and other important conditions carefully before making any kind of investment.

Investments should be made according to the personal appetite of the investor and not by following anybody else.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

Past 10 Years' annualised returns as on 01-12-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).