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Dhanteras 2024, a day in the Indian calendar holds great importance as households nationwide invest in gold. This custom is firmly grounded in the belief that acquiring gold on this occasion leads to prosperity and helps dispel negativity.
As the festivities are near, investors often ask if they should opt for physical gold, gold ETFs, or consider the lesser-known Sovereign Gold Bond Schemes (SGBs).
At present, investors have multiple options for buying gold, including holding physical gold, investing in Gold ETFs, or Sovereign Gold Bond Schemes (SGBs).
- Physical Gold
While physical gold is cherished for its tangible presence, it comes with challenges. It needs a secure storage solution, raises concerns about its purity, and needs the ease of turning into cash like its digital counterparts.
- Gold ETFs
Gold ETFs offer a convenient method for investing in gold. It represents physical gold in a dematerialized form and offers flexibility similar to stock investments. However, it involves management fees and has tax considerations for investors with long-term goals.
- Sovereign Gold Bond Schemes
Among these choices, Sovereign Gold Bond Schemes stand out as a preferred option for investors this Dhanteras. SGBs are government securities valued in grams of gold and supported by a sovereign guarantee.
| Aspect | Physical Gold | Gold ETFs | Sovereign Gold Bond Schemes (SGBs) |
|---|---|---|---|
|
Storage and Purity |
Requires secure storage and purity checks |
No storage or purity concerns |
No storage or purity concerns |
|
Liquidity |
Less liquid, selling through dealers or jewelry stores |
Highly liquid, traded on stock exchanges |
Less liquid compared to Gold ETF but sufficiently liquid, traded on stock exchanges
|
|
Interest Income |
Does not offer interest income |
Does not offer interest income |
Offers 2.5% annual interest, taxable as per the investor's tax bracket
|
|
Tax Implications |
Subject to capital gains tax upon sale |
Subject to capital gains tax upon sale, potentially long-term or short-term |
Capital gains are tax-exempt if held until maturity (8 years)
|
|
Sovereign Guarantee |
No sovereign guarantee |
No sovereign guarantee |
Comes with a sovereign guarantee
|
|
Default Risk |
No default risk |
No default risk |
No default risk |
| Aspect | Physical Gold | Gold ETFs | Sovereign Gold Bond Schemes (SGBs) |
|---|---|---|---|
|
Initial Investment |
₹100,000 |
₹100,000 |
₹100,000 |
|
Gold Price Increases (5 years, 5% annually) |
₹127,628 |
₹127,628 |
₹127,628 |
|
Interest Income (5 years, 2.5%) |
N/A |
N/A |
N/A |
|
Final Return |
₹127,628 |
₹127,628 |
₹140,128 |
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As Dhanteras approaches, choosing where to invest in gold is a big decision. While physical gold and gold ETFs have advantages, Sovereign Gold Bond Schemes (SGBs) are a smart choice for investors.
SGBs have the potential for your investment to grow, a nice 2.5% annual interest, and the best part – they’re tax-efficient. If you hold them until they mature, you won’t pay capital gains tax.
SGBs are also easy to buy and sell, come with a government guarantee, and let you benefit from past gold returns. The tax benefits apply even if you buy them in the secondary market or a bond platform.
Final Words
If you’re thinking about buying gold in Dhanteras 2024 you have several options:
Physical gold: The traditional way of purchasing gold is by buying items like gold jewelry, coins, or bars.
Gold mutual funds: These are investment funds that include gold related assets.
Gold stocks: You can invest in companies involved in mining or making gold.
Gold derivatives: These are contracts related to the future price of gold available in the market.
Sovereign Gold Bonds (SGB): These are backed by the government and their value is linked to the gold market. Holders receive both interest and market linked returns.
Gold ETFs: These are passive investments based on the price of gold.
Digital gold: This allows investors to link their money to the current value of gold in a digital form.
These are the options available to you for investing in gold this Dhanteras each comes with its own advantages and considerations, so think about which one aligns best with your financial goals.
Happy investing and thank you for reading!
Disclaimer:
This website content is only for educational purposes, not investment advice. Before making any investment, it’s important to do your own research and be fully informed. Investing in the stock market includes risks, and you should carefully read the Risk Disclosure documents before proceeding. Please remember that past performance doesn’t guarantee future results, and due to market fluctuations, your investment goals may not always be achieved.
