Gold investment comparison: with all form | Returns comparison 2022

Introduction

In this article, we will study gold investment comparison with all its types along with returns so that you can easily decide on gold investment.

Physical gold vs Digital vs Gold ETFs vs Gold MF vs SGB

What is ?

Physical gold-Coins/Biscuits
It is often bought in the form of jewellery, biscuits and gold coins.

Digital gold
Digital gold is a convenient and cost-effective way to accumulate the Gold metal for those who prefer it in physical form like coin and jewellery.
Digital gold enables you to purchase, sell and accumulate pure gold in fractions of gms anytime and anywhere.


Gold ETF
Gold ETFs are listed & traded on the NSE-National Stock Exchange of India and BSE-Bombay Stock Exchange Ltd. like a stock of any other company.
ETFs are suitable for investors who like to diversify their portfolio with exposure to the gold market.

Gold Mutual fund
Gold Mutual Funds are pooled investments managed by Mutual Fund Houses and are designed to help investors to invest in gold electronically.
These funds invest in a Gold ETF floated by the Asset Management Company..

Sovereign Gold Bond Scheme
Sovereign gold bond issued by the government of india is one of the ways to own gold in paper form.
The SGB scheme, issued by the Reserve Bank of India on behalf of Government of India that allows you to enjoy the advantages of investing in physical gold along with additional assured returns.
Initial amount

Physical gold-Coins/Biscuits
Coins are available in denominations of 5 & 10 grams and the bars will be for 20 grams.

Digital gold
Minimum value to buy gold starts from Rs 1.

Gold ETF
Initial investment limit in gold ETF is 1 unit which is equivalent to 1g of gold.

Gold Mutual fund
SIP can start with min investment of Rs. 500.


Sovereign Gold Bond Scheme
Minimum initial investment is 1 gram of gold.
How to invest ?


Physical gold-Coins/Biscuits
Coins and bars can be purchased from jewellers, Banks, NBFC, MMTC outlet and now a days even e-commerce website also sell gold coins and bars from authenticated MMTC seller.

Digital gold
Gpay, Phonepe, Paytm etc.

Gold ETF
Demat account.

Gold Mutual fund
Mutual funds app.
Direct Mutual Fund through the Asset Management company website.

Sovereign Gold Bond Scheme
Banks, Post office, Stock holding corporation of india, Demat account.
How much ?


Physical gold-Coins/Biscuits
No Limit
It is advisable to stay the documentation proof if you buy or received from an inheritance source like Will or written documentation proof. However, your ITR should correspond to the quantity of holding.

Digital gold
Paytm - Maxmiam limit is 1.5L.
Stock Holding Corporation - No limit (If purchase amount exceeds Rs 50,000, then PAN card copy will be required ).
PhonePe - 60 grams.

Gold ETF
No limit

Gold Mutual fund
No limit

Sovereign Gold Bond Scheme
Maximum 4 KG for an individual as per rules for SGB 2020-21.
Long-Term Capital Gains Tax

Physical gold-Coins/Biscuits
LTCG applicable after 3 years

Digital gold
LTCG applicable after 3 years

Gold ETF
LTCG applicable after 3 years

Gold Mutual fund
LTCG applicable after 3 years

Sovereign Gold Bond Scheme
LTCG applicable after 3 years. (No capital gain tax if held till maturity).
Systematic Investment Plan

Physical gold-Coins/Biscuits
Not Applicable

Digital gold
Available

Gold ETF
Not Applicable

Gold Mutual fund
Available

Sovereign Gold Bond Scheme
Not Applicable
Safety and Security factor

Physical gold-Coins/Biscuits
Low - Due to higher risk of theft and cheating

Digital gold
High- Due to low risk of theft and cheating

Gold ETF
High- Due to low risk of theft and cheating

Gold Mutual fund
High- Due to low risk of theft and cheating

Sovereign Gold Bond Scheme
High- Due to low risk of theft and cheating
Trading factor

Physical gold-Coins/Biscuits
Not Applicable

Digital gold
Not Applicable

Gold ETF
You should have knowledge of market for ETFs funds & trading.

Gold Mutual fund
Not Applicable

Sovereign Gold Bond Scheme
Not Applicable
Liquidity (Liquidity is the ability to convert an asset into cash easily)

Physical gold-Coins/Biscuits
High*
*Risk of theft and cheating in this process.

Digital gold
High

Gold ETF
Moderate*
*Tradable on the exchange

Gold Mutual fund
High

Sovereign Gold Bond Scheme
Moderate*
*Tradable on the exchange
Investor can sell it on the stock exchange if they need the funds before its 5 year maturity
Delivery

Physical gold-Coins/Biscuits
Yes

Digital gold
Minimum .5-1 gram

Gold ETF
Minimum 1 Kg

Gold Mutual fund
No

Sovereign Gold Bond Scheme
No
Loan facility

Physical gold-Coins/Biscuits
Available but it's applicable on less than 50 gram coins as per RBI guideline

Digital gold
No

Gold ETF
No

Gold Mutual fund
No

Sovereign Gold Bond Scheme
Available- SGB certification is eligible to be used as collateral for loans from banks, financial Institutions.
Lock in period

Physical gold-Coins/Biscuits
No

Digital gold
No

Gold ETF
No

Gold Mutual fund
No

Sovereign Gold Bond Scheme
5 Year
Storage cost

Physical gold-Coins/Biscuits
High (Bank locker cost)

Digital gold
Low

Gold ETF
Low (Security charges on Demat account)

Gold Mutual fund
Low

Sovereign Gold Bond Scheme
Very Low
Purity of Gold

Physical gold-Coins/Biscuits
Purity check needed

Digital gold
High- Due to digital form

Gold ETF
High- Due to electronic form

Gold Mutual fund
High- Due to electronic form

Sovereign Gold Bond Scheme
High- Due to electronic form.

Returns comparison

Goods and Services Tax

Physical gold-Coins/Biscuits
3%*
*depending on Government of India

Digital gold
3%*
*depending on Government of India

Gold ETF
NA

Gold Mutual fund
NA

Sovereign Gold Bond Scheme
NA
Storage,Transition & Delivery charges

Physical gold-Coins/Biscuits
NA

Digital gold
approx. 1.5% - Delivery charges applicable

Gold ETF
NA

Gold Mutual fund
NA

Sovereign Gold Bond Scheme
NA
Exit Load

Physical gold-Coins/Biscuits
NA

Digital gold
NA

Gold ETF
NA

Gold Mutual fund
1% exit load applicable in case of redemption before 1 year.

Sovereign Gold Bond Scheme
NA
Brokerage/Government charges

Physical gold-Coins/Biscuits
NA

Digital gold
NA

Gold ETF
0.1-0.5% + Brokerage charge.

Gold Mutual fund
0% - in case of Direct Mutual fund

Sovereign Gold Bond Scheme
0%
Expense Ratio

Physical gold-Coins/Biscuits
NA

Digital gold
NA

Gold ETF
ETF charge : 0.5-1% per year

Gold Mutual fund
Management Fee : 0.5-1% per year
+
ETF charge : 0.5-1% per year

Sovereign Gold Bond Scheme
NA
Extra Interest

Physical gold-Coins/Biscuits
NA

Digital gold
NA

Gold ETF
NA

Gold Mutual fund
NA

Sovereign Gold Bond Scheme
2.5% per year
Approximate returns in 5 year

Physical gold-Coins/Biscuits
45%

Digital gold
45%

Gold ETF
45%

Gold Mutual fund
45%

Sovereign Gold Bond Scheme
45%
Actual return on gold

Physical gold-Coins/Biscuits
45-3 = 42%*
*We have not considered storage charges.

Digital gold
45-(3+1.5)= 40.5%

Gold ETF
45-5=40%*
*We have not considered brokerage charges.

Gold Mutual fund
35%*
*If you don't exist before 1 Year.

Sovereign Gold Bond Scheme
45 + (2.5*5) = 57.5%

Gold comparison with Silver

Liquidity
In terms of liquidity, gold is more easily sold off than silver.
Without compromising on the shifting rate of commodity gold stays at a higher place than silver when required to sell-off.
Storage
Silver requires up to 100 times more storage space than gold, is more high-priced to store, and could tarnish over the years.
Affordability
Silver is more affordable than gold, with the same benefits.
Allows sellers to meet small financial desires in the future. Less expensive for gifting.
Volatility
Gold is less volatile than silver.

Gold comparison with Platinum

Durability

Platinum
Extra long-lasting than gold

Gold
Durable enough for regular wear
Maintenance

Platinum
Required to be re-polished and re-plated more regularly than gold.

Gold
Require less maintenance for gold holding as it loses its luster after many years as compared to platinum.
Price

Platinum
approx. 50% highly-priced than gold as
platinum is more dense than gold so need to invest more in platinum to make the same weight item.

Gold
More affordable as compared to platinum.

Conclusion of Gold investment comparison

After having compared all forms of gold, we would like to suggest that in the current market scenario if one planning to buy gold can park their funds in the sovereign gold bonds as per apart from a price hike in gold and it gives an additional return of 2.5% and one can feel stress-free after investing in SGB as no storage or issue of theft is there.

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