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Can I invest in Gold for long term – How to buy gold in India

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Are you planning to invest in gold for long term? Do you know what is the gold price today in India? Is gold a good long term investment? If the answer is yes for both the questions then I will guide you to how to invest in gold for long term. Gold is one of the most popular and demanding precious metal where one can really invest for long term. The requirement of gold will never go down as due to demand in gold ornaments for various functions, especially Indian marriages. But it is always better to buy gold in raw format instead of jewellery. As in long run jewellery will reduce its value. Let’s find out how one can invest in gold in India for long term to gain some really good return.

How to invest in Gold for long term

Why one should invest in gold for long term?

Gold is the only currency which can be used in every country. In worst days this is the only currency which can be used widely. If you track the gold prices in last 10 years then you can understand that Gold has always followed an upward trend in price (although last year it went down). And with inflation point of view it is a very good factor. So one can easily say that today if you buy some gold, after 20 years you will have the value similar to that time liquidity. So gold is the best investment product to beat the inflation in long term.

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If you follow stock market trends then you might notice that gold price is behaving reversely with stock market. Means when stock market goes down gold price will go up. So you can depend up on your gold investments during that phase. E.g. In last 1.5 year stock market has rise sharply where gold has lost its glitters. But remember buying gold in jewelry format doesn’t mean investment 🙂

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How to invest in gold for long term in India

One can expect a 9-10% return from gold investment for a long term more than 15 years. In India there are various ways to invest in gold. In this segment we will discuss various ways one can invest in gold for long term in India.

Buying Jewellery: This is the way people mostly buy gold. If you are planning for your kid’s marriage then you can start buying gold whenever price is going down. This is one of the best ways to invest in physical gold for long term. These days on dhanteras festival people buy gold compulsorily as they consider it auspicious. So you can buy on that occasion as well. Many Jewellery shops started selling gold ornaments in various attractive schemes as well. E.g. PC Chandra Jeweller – one of the famous Jeweller in Kolkata offer various attractive schemes to buy gold. One can utilize those schemes as well and invest in gold for long term.

Buy Gold Bar or Coin: This is also a very good option one can utilize if you are not keen to buy jewellery. But at the same time if you don’t want to buy gold online as well via Mutual fund. It is better to buy gold bar or coin from Jewellery shop rather than banks as banks don’t buy back them when you want to sell your gold. There are many MLM schemes as well on gold coin. Beware of them and try to stay out of them.

If you really want to buy physical gold then the best option is to buy gold bars or coins from Jewellery shop and keep them for long term. But for that you might have to open a locker in a bank to stock them. This is one disadvantage of buying physical gold.

Buy Gold ETF: This is like investing in stock market. For that you need a demat account. One can buy Gold ETF units like other stocks. This is one of the smartest ways to invest gold as one will buy only units not physical gold. No tension to keep the gold safe. One can sell those units on emergency situation. But the problem here is that you have to maintain a demat account and while selling you have bear some brokerage charge as well.

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Buy Gold Mutual Fund: If you are not ready for the above option then there is another way to invest in gold, that is invest via gold mutual funds. Again you have to bear some fund maintenance charges here and that is complete extra than buying gold directly via Gold ETF. But this is one of the preferred ways as one can invest in gold via regular SIP option.

If you ask me which is better Gold ETF or Gold Mutual Fund, Then I would say it’s always up to investor. If you like to deal with stock market then Gold ETF is definitely best option for you. But if don’t want to track every day then go with Gold mutual fund. But in overall comparison one has to bear more chares in investment on gold mutual fund due to extra maintenance charges. This means less long term return compare to Gold ETF. Actually Gold mutual funds collect money from you and further invest in Gold ETF only. I think now it is clear.

These are the popular ways to invest in gold online. There are few other ways one can invest in gold for long term. Let’s take a quick look on them as well.

E-Gold: This is similar to gold ETF. But in this case one can withdraw as physical gold.
Gold Saving Fund: This is like mutual fund investment. For that no demat account require. One can invest in gold saving funds via SIP.

Few Questions Answered regarding gold investment in India

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Can I get loan against my physical gold?

If you have a good amount of gold then you can utilize it in various ways. Just think if you need a personal loan then your gold stock can bring that easily. You can easily take gold loan from Muthoot Finance or Mannapuram Gold or other banks. Interest rates depend on how much loan you take against your gold.

Can I save income tax by investing in Gold?

No. Gold investment is not considered for income tax saving option. But ETF or e Gold are subjected to long term capital gain tax. So you have to pay tax on maturity.

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What is the investment scope in Platinum or Silver or Diamond besides Gold?

Investing in precious metal needs a different kind of knowledge and risk taking capacity. You have to know about the market, history and what could be the future. As gold is mostly popular one can advise from anyone. Off-course the investment opportunity is huge as demand for other precious metal is always there.

How to open a safe deposit locker in India for physical gold?

I think you can visit in any bank and ask for the same. There are various types of locker available and according to that you have to pay a yearly fee. I will prepare a separate article to address this question.

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Can I buy gold from Post-Office?

Yes. You can buy gold coins from Indian post offices.

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So this all about gold investment in India. I hope I have covered almost everything, but not 100%. For that I need you to share your doubt or query here by a simple comment. Do you think one can invest in gold for long term and make enough wealth? How much you are investing in gold every month of your entire portfolio?

8 COMMENTS

  1. Gold is one of the best investment option either it’s for Short Term or Long Term there are many ways to invest in Gold. Among them as per my view Trading in MCX Gold is better because it’s value based on market and there will be no depreciation, easily converted to liquid cash and many more advantages. I’m trading in Gold taking the service from #SquareIndia Advisory Pvt Ltd which helped me to gain better returns as time matters in trading. They also helped me to get better returns even market is in bad condition too. For Trading important aspects are Selection of right instrument, Professional approach,Time. For better returns on investments have a look on #SquareIndia Advisory Pvt Ltd.

    • Its actually very simple. FundsIndia has a huge list of Mutual Funds analysed by their research team. You have to select the funds and the fix the amount you want to invest as SIP. Then execute the same like creating a standing instruction in online banking account.

  2. Thanks for the information! I’ve recently came across some money, so I would like to invest some of it in gold. It’s good to know that there’s more than one way to invest in gold. I thought that what you had to say about buying gold jewelry was really interesting. I didn’t know that most people usually buy their gold in jewelry. Is this how most people buy gold all over the world, or only in India? It would be more helpful to know the overall best method for investing my money in gold.

    • Hi Denna,

      In India most people buy gold in Jewelry format only. Recently due to awareness investment in Gold is come in picture. But again with the upward trend in stock market, Gold is loosing it’s plot again.

      But I think, one can invest in gold via mutual fund or e-gold format. Keeping physical gold with us increase more liability of storing & security.

  3. Very informative article for the gold investor. Great work Santanu.

    Gold is really a very valuable investment. We love it for ages. But I am concerned about being posessive of the gold. Do our country really needs so much of imported gold? Do gold helps the growth of the country?

    Regards
    Chandrakant

    • Thanks Chandrakant. I can see gold is highly used in Marriages mainly in south India and even temple donations. People are possessive too much about gold and most of the I think it is a status factor also. I have no idea out of entire Gold consumption how much actually consumed for investment purpose. People only buy Jewellery and store them.

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