Learn About 3 Forms of Digital Gold: Financial Investment 2024

1. Gold Exchange-traded funds

ETFs are a flexible and simple form of digital gold investment. It tracks the price of physical gold and is a commodity fund traded on a stock exchange. You can use an online trading app for investing which enables you to buy and sell units of gold ETFs similarly to stocks.

Gold ETF Pros

Extremely liquid, low investment amounts, transparent holdings and prices, and No storage fees or worries.

Gold ETF Cons

Has annual expense ratio (around 1%), no physical gold is owned, open to financial markets systemic risks.

Gold Mutual Funds

By investing in gold securities these aim to mirror domestic gold prices. These require investments that are a bit higher but otherwise are similar to gold ETFs.

Gold Mutual Funds Pros

Chances of higher returns through fund selection, funds are professionally managed, and options for SIPs and other systematic investments.

Gold Mutual Funds Cons

Can not take delivery of gold, 1.5-2% expense ratios on average, and changes of systemic financial market risks.

Sovereign Gold Bonds

SGBs are government-issued bonds denominated in grams of gold. You receive 2.5 percent fixed interest paid semi-annually, and the redemption amount equals the gold price on maturity.

SGB Pros

The interest you earn would be tax-free, backed up by the Indian government, easy online purchasing process, and when you want a loan this can be used as collateral.

SGB Cons

Early exit or trading is not an option, 5-8 maturity periods where it will be locked, and limitations of quantity on each series purchase.