Best way to Invest in Gold for optimal Returns

One safe bet for investment anytime is Gold. Some reasons include:

1. It is always in demand, and gold prices are bound to increase, except during some windows.
2. Unlike other forms of investment like shares, you can always convert or materialize your gold investments into physical ornaments and use them. So in a worst case scenario, you have build sufficient gold to help you make those jewelry purchases during marriages and other occasions.

So it would be wise to allocate atleast 20% of your investments in the Gold Basket.

Now the next question is “What would be the best way to invest in Gold?”

With physical gold having its own limitations including safety and lack of returns, investors are increasingly looking to invest in electronic and paper gold.

While various apps like amazon, google pay, phone pe, paytm and a host of other providers tempt you with offers to buy Digital Gold, did you know that you lose almost 5% on such investments to taxes?

The better option to invest in e-Gold/ Digital Gold is through Sovereign Gold Bonds followed by gold ETF and gold mutual funds, as against digital gold. By choosing Sovereign Gold Bond, gold ETF and gold mutual funds ahead of digital gold an investor will be able to save an additional 5 per cent difference on buying and selling of gold. On digital gold, you lose 3% as GST, up to 2% in commissions, & a spread >5% (buy-sell difference).

WHY SOVEREIGN GOLD BONDS are the BEST BET?

Investors receive interest of 2.5% per annum from Sovereign Gold Bonds, which is added to the investor’s taxable income and taxed according to the applicable income tax slab.

SGBs have a maturity period of eight years. The capital gains one makes from SGBs, if held till maturity, are tax-free. However, investors can prematurely redeem SGBs after five years. If you redeem SGBs between five to eight years, the gains are considered long-term capital gains. It is taxed at 20.8% (including cess) with the indexation benefit.”