Best Strategies For Gold Investment In India For 2023

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Best Strategies For Gold Investment In India For 2023
03 Feb 2023
5 min read

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Our parents have always advised us to buy gold, and they are correct. Most importantly, gold may help investors in recouping their losses on the stock market. Another excellent approach to stave off inflation is using gold. According to the majority of financial gurus, you should allocate a small amount of your portfolio to gold stocks.

As a result of the Union Budget 2023's increase in the customs charge on gold, silver, and diamond, jewellery items will become more expensive. Imported silver, platinum, and gold are expected to increase in price, which means that jewellery made of these materials will cost more.

The best gold investment strategy depends on an individual's specific financial goals, risk tolerance, and investment horizon. However, here are some common strategies for investing in gold in India: In this blog post, we will explore Best Gold Investment Strategies & Gold Stocks in India.

The past of gold is vague. Before the 1970s, a lot of strong nations backed their money with gold. The Gold Standard was used for this. Every dollar could be traded for 1.5g of gold in the US. The Gold Standard has been permanently abandoned by the globe. Now, rather than being a kind of currency, gold is a marketable commodity. If you had purchased 1 lakh rupees worth of gold in 2010, it would now be worth 2.60 lakh rupees. Over the last ten years, gold prices have climbed by more than 160%. Gold investment has its own advantages. You may acquire gold using innovation and technology without leaving your house. In this article, we will explore the various gold investment strategies and inform you about the best-performing gold stocks in India.

Best Strategies For Gold Investment In India For 2023

Different Types Of Gold Investments

1. Physical Gold:

This is the most traditional and widely used form of gold investment in India, which involves buying and holding physical gold in the form of coins, bars, or jewellery. One can still purchase gold jewellery, biscuits, coins, and other items by going into a jeweler's store on foot. However, you can wind up spending more because you'll need to cover the costs of production as well as take into consideration a quality decrease over time. When keeping valuables in a bank locker, one might also have to pay the locker fee. Physical gold could be stolen, lost, or forgotten. Additionally, you could have to invest a lot of money upfront if you have to purchase a minimum large amount of gold.

2. Digital Gold:

This is a newer form of gold investment in India, which involves buying and holding gold in an electronic form through platforms like Paytm, Mobikwik, and others Digital gold can be purchased for as little as Rs 1. Digital gold is offered by numerous businesses, including Digital Wallets, Brokerage Firms, and Private Jewelers. PayTM, PhonePe, Motilal Oswal, Groww, Kalyan Jewellers, Tanishq By Tata, and numerous other companies are among them. Redeeming digital gold for actual gold is a possibility.

The "spread%" associated with purchasing digital gold should be noted. Depending on the merchant, this can range from 2 to 6 percent. A spread is a difference in the price at which digital gold is being bought and sold at a particular moment in time. At any given time, the cost to buy digital gold is higher than the cost to sell it. The spread money is used for things like trustee fees, insurance, and storage. Both the purchase and selling of digital gold are subject to a 3% GST.

3. Gold ETFs:

These are funds that invest in physical gold and can be bought and sold on stock exchanges like any other equity security. Funds that can be traded on stock exchanges and need a Demat account are known as Gold Exchange Traded Funds, or Gold ETFs. They don't have a spread between the purchasing and selling prices at any particular moment, unlike digital gold. A Gold ETF's units are backed by real gold. During market hours, they can be bought and sold at their trading price. In contrast to physical and digital gold, they are not subject to GST while being purchased and sold. Compared to digital or physical gold, gold ETFs are more beneficial in terms of taxability and holding costs.

4. Gold mutual funds:

Gold mutual funds invest in gold-related equity shares or gold exchange-traded funds (ETFs). They don't need a Demat account, unlike ETFs. A gold mutual fund's minimum ticket size is lower than a gold ETF's. A potential exit load could apply if you withdraw from a gold mutual fund before the lockin period. SIP-based Gold Mutual Funds allow you to invest a little sum over a set period of time.

5. Sovereign Gold Bonds:

These are bonds issued by the Government of India that offer an investment opportunity in gold. The bonds are denominated in grams of gold and are redeemable in cash.

Bonds known as "Sovereign Gold Bonds" are those that the Reserve Bank of India issues on behalf of the central government. An SGB is backed by one gramme of gold for each unit. A semi-annual dividend of 2.50%–2.75% is regularly paid by an SGB. An SGB is tax-free if held until maturity or for 5-8 years after the issue. An SGB is the most advantageous gold investment in terms of taxability when making long-term investments. SGBs are subject to a 20% capital gains tax in the event of early redemption.

Things to Consider Before Investing In Gold Stocks

Gold is not a cheap commodity, so a bad hand could cost you your hard-earned cash. If you are considering purchasing gold shares in India or already own some, bear the following in mind:

Decide Your Investment Strategy

Investing in gold stocks can be done in one of three ways: directly through gold mining firms, through gold exchange-traded funds, or through gold mutual funds. Prior to making a purchase, it is crucial to examine the benefits and drawbacks of each of these modalities by carrying out independent research.

Keep Up With the Times

To completely understand your investments, you must keep up with current events.

Consult an expert

It's normal to feel overwhelmed when investing, which could affect the investments you choose. Although it could cost a bit more to engage a financial counsellor, they might be able to assist you to get the highest returns.

Tax Benefits

Additionally, gold stocks have some tax benefits. Funds, such as the SBI Gold Fund, can be thought of as non-equity products. After a year has passed since the initial investment, Gold Stocks can be sold for long-term capital gains.

Begin Small

You might begin by making a little investment in Gold Stocks. You don't have to have a substantial chunk of money saved aside in advance. Instead, start softly and progressively expand as it becomes more practicable for you.

Also Read: 5 Things To Consider Before Taking Out Loans

Advantages of Investing In Gold Stocks in India

  1. Diversification: Gold stocks can provide a diversification benefit to an investment portfolio as their performance is not closely correlated with other asset classes such as stocks and bonds.

  2. Inflation Hedge: Gold has a history of retaining its value during periods of inflation, making gold stocks an attractive option for investors looking to hedge against rising prices.

  3. Potential for Capital Appreciation: Gold stocks can offer the potential for capital appreciation as the price of gold rises.

  4. Income Generation: Some gold mining companies pay dividends to their shareholders, providing a regular income stream for investors.

  5. Exposure to the Gold Mining Industry: Investing in gold stocks provides exposure to the gold mining industry, which can benefit from rising gold prices and operational efficiency improvements.

You may also want to know the Best Ways to Invest in Gold

Best performing Gold Stocks in India

Following is some extensive information and a performance review of the Gold Stocks mentioned above-

1) Titan Company

Titan Firm Limited is an India-based company which is primarily involved in the manufacturing and selling of watches, jewellery, eyewear, and other accessories and items.

The Company's segments include Watches and Wearables, Jewellery, Eyewear, and Others. The Titan Company Gold Stock is a prominent and leading Gold Stock in India.

2) Muthoot Finance Ltd.

Muthoot Finance Limited is an India-based gold finance company. The Enterprise is a non-deposit-taking, non-banking financial company which is engaged principally in the business of financing.

It provides personal and commercial loans secured by gold jewellery. It lends against the security of household-used gold ornaments (HUG) and does not deal in gold bullion.

3) Rajesh Exports

Rajesh Exports Limited is engaged in the business of gold and gold products. The Company is involved in gold refining and manufacturing of various gold products. It makes handmade jewellery, casting jewellery, machine chains, stamped jewellery, studded jewellery, tube jewellery, and electro-formed jewellery.

The Company provides gold and diamond jewellery in retail through its branded retail jewellery chain stores under the brand name SHUBH Jewellers.

4) Manappuram Finance Ltd.

Manappuram Finance Limited is an India-based non-banking financial company (NBFC). The company services the credit requirements of persons belonging to the lower socio-economic classes, primarily in rural and semi-urban parts of India.

The Company offers a range of retail credit products and financial services.

5) Vaibhav Global

Vaibhav Global Limited is an India-based vertically integrated electronic retailer of fashion jewellery, home, beauty, leisure, and essential products. The Company offers to consumers in the United States and the United Kingdom.

6) Kalyan Jewellers

Kalyan Jewellers India Pvt Ltd is an India-based jewellery retailer and a prominent gold firm in India. This is a top Gold Stock in the country. The Company offers Gold, Diamond, Platinum and Silver jewellery products. The Company's brand comprises Mudhra, Anokhi, Rang, Vedha, Tejasvi, Apoorva, Ziah, Laya and Glo.

The services supplied by My Kalyan include jewellery purchase advance plans, gold insurance, wedding purchase planning, advance booking of purchases to protect against price hikes, sale of gift certificates, and gold buying recommendations and education.

Conclusion

After reading about the many sorts of Gold Stocks you can acquire, you can now consider purchasing Gold related Stocks in India. Even though investing in Gold Stocks is generally safe, you must undertake extensive research before you start.

Since pre-historic times, gold has been a safe haven asset. A person would accumulate gold and sell it in times of distress to make things work. Once can expect gold prices to skyrocket during an economic crisis and collapse during economic growth. Timing is a very critical issue while investing in gold in order to maximise profit. Each gold investment kind is tied to the market performance of gold. Factors like liquidity, transferability, and taxability make them different from one other. One should diversify their investments even in gold depending on their short and long-term interests. Until then, remain home, be safe, and do thorough research before investing.

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory. It is important to consider factors such as the investor's financial goals, risk tolerance, and investment horizon before choosing a specific type of gold investment in India. Consulting with a financial expert is recommended for personalized investment advice.

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