The volatility of the stock market and the plummeting interest rates of traditional investment avenues like fixed deposits, EPF, and PPF have prompted demands for alternative investment channels. In this regard, gold has presented itself as a worthy substitute, as it retains its equity over time.
The total investment demand of gold has increased by 41% in the Q4 of 2020, compared to Q3 of 2019.
However, investors have to worry about the purity and legitimacy of physical gold items like bars and coins while investing. On the contrary, investing in digital gold allow investors to bypass these challenges presented by physical gold.
What Is Digital Gold?
As its name suggests, e-gold offers an investment avenue where individuals can purchase it online and store them in secure vaults. This 24-carat gold can be brought through various aggregators and in a small fraction. Owing to its benefits, this gold investment trend is quickly gathering steam in India.
Benefits Of Investing In Digital Gold
Digital gold investment has opened a new avenue for investors owing to the following benefits –
Quality Assurance: A major advantage of this investment medium is its purity. Usually, vendors offer 24-carat gold with 999.9 purity.
No Investment Cap: There is no maximum threshold for investment in digital gold. One can invest any amount that he/she is comfortable with.
Safety: Vendors store the purchased quantity of gold in a secure vault till one wishes to convert it into physical form and get it delivered. Moreover, companies often extend free storage service for a specific period and might charge an amount after that. Furthermore, safety measures like insurance cover and trustees are in place to safeguard an individual’s investments.
High Liquidity: Digital gold is a highly liquid investment method. One can sell it back to the vendor or convert it into physical gold. However, it may require individuals to pay a certain amount, which varies from one lender to another.
In current times, investing in gold, especially in digital gold, makes a lot of sense. The stock market’s unpredictable performance due to the current economic situation presents this method as a contrasting approach to investment. It is a safe and secure method, and with the availability of online aggregators like KredX, one can quickly invest in digital gold, bonds, and PMS, without any hassle.
Along with online gold investments, the current investment trend in this segment also presents some attractive options. Being aware of such information can help individuals diversify their portfolio further and even out the losses from other areas.
Alternative Gold Investment Options
Here are some notable gold investment options that can help individuals secure better and steady returns –
Sovereign Gold Bonds: Reserve Bank of India releases these bonds periodically, and they are available for purchase through leading financial institutions. These bonds are issued by the Government of India and linked to gold’s price. However, one cannot convert them into physical gold.
Gold ETF: Known as Gold Exchange Traded Funds, these are traded on stock exchanges like other shares. The primary underlying asset here is physical gold and stocks of gold mining and refining companies.
Apart from these two options, gold mutual funds are another viable way to invest in this asset. Mutual funds like these focus on different gold ETFs for a higher return.
Besides the investment options, one should also be aware of the benefits of investing their money in gold.
Benefits Of Investing In Gold
Here are some benefits of prioritising gold as an investment option –
- Safeguards against inflation
- Price stability
- Not a depreciable asset
- High liquidity
- Secured investment option
Considering the economic turmoil that India is going through, gold emerges as a more feasible, eligible option. Since it preserves its equity against falling interest rates, the demand has increased significantly. In this regard, digital gold presents an avenue where individuals can make investments as per their capacity and diversify their portfolio and get secured returns.