Ways to invest in gold
You don’t need to buy jewellery to invest in gold.
- Sovereign Gold Bonds (SGB) — government bonds tracking gold, paying 2.5% annual interest on top of price gains.
- Gold ETFs — exchange-traded funds that track the gold price, held in demat and traded like a stock.
- Gold mutual funds — funds that invest in gold ETFs, bought at NAV without a demat account.
- Physical gold — coins or jewellery, with making charges, storage and purity concerns.
Which is best?
For pure investment, paper gold usually beats physical — no storage, no making charges, and better liquidity. SGBs are attractive if you can hold to maturity (extra interest, and gains on redemption are tax-free), while gold ETFs offer easy entry and exit.
How much gold?
Gold is a safe-haven that often rises when equities fall, so a modest allocation (commonly 5–10%) can diversify a portfolio. It isn’t a high-growth asset — it’s a stabiliser.
Frequently asked questions
What is the best way to invest in gold?
For investment, paper gold (Sovereign Gold Bonds or gold ETFs) is usually better than physical gold — no storage or making charges and better liquidity. SGBs add interest and tax-free maturity gains if held to term.
Are Sovereign Gold Bonds better than gold ETFs?
SGBs pay 2.5% annual interest and are tax-free on maturity but have a long lock-in; gold ETFs offer easy exchange-based entry and exit. Many investors use both.
How much of my portfolio should be in gold?
Gold is a diversifier, not a growth engine — a modest allocation (often 5–10%) is a common guideline, adjusted to your goals.