Gold Investment Tips That Will Change Your Life

‘Investing in gold is one of the wisest decisions that you can make as an investor.’ –Fabrizio Moreira

Gold is that yellow metal that has more emotional value than its monetary value. It is that family asset that is bought, cherished, and passed on from one generation to another. Be it antique jewelry or the latest styles it’s part of fashion flaunted by women and men today. Gold jewelry is bought as an ornament while gold coins and biscuits are bought as an investment.

India, the second largest consumer of gold in the world behind China, is also in the 9th position with gold reserves worth 785 tons of gold. Gold prices rise with inflation and drop with deflation. Seen during the Covid19 pandemic, gold rates spiked to an all-time high of Rs.5619 per gram.

Though fluctuation and volatility do exist, the price is expected to hike in the coming two years.

There is a better way to invest in Gold than buying it as jewelry or coins and it is called the Sovereign Gold Bond Scheme.

1. What is SGB Scheme and what are its features?

It is a type of Government Bond issued by the Reserve bank of India in the denomination of grams of gold. It is an alternative to holding gold physically. Issue prices are notified each time and after the maturity, it will be redeemed in terms of Cash. E.g., if the issue price is Rs.5409 per gram, you can buy 10 grams of Gold Bond for Rs.54090.  There is a lock-in period of 8 years with an exit option available in the fifth year.

2. Where can I avail of SGB?

The SGB scheme can be availed from Post offices or Scheduled Commercial Banks.

3. What are the advantages of SGB over usual gold ornaments or coins?

The investor gets the then ongoing Market Price of the gold, at the time of maturity.

The investor also gets an interest similar to Bank Fixed Deposit.

The cost of storage and risks associated with storage is eliminated as it is paper gold.

When gold is bought and sold after a while, the making cost and purity changes get affected and the price may decrease. It doesn’t happen with SGB.

Jewelry fashion and trends may change and so do individual preferences. If you wish to invest for your daughter, SGB is a better choice. Once you redeem the SGB, you can buy the gold as per the taste & trend in the future.

“I have bought some gold without knowing about the above scheme. Now that gold is idle at home. Is there any way to use it?” -Many clients had asked me this question and here is the answer:

Availing Gold Loan is the best answer to this. Pledging your gold with a trusted financial institution is the easiest and quickest way to convert your idle asset into money and you can use that money in other investment areas for higher returns. So, keep holding on to gold-SGB.

Sandhya Naren, MBA, CAIIB is a Branch Manager of a Public Sector Bank, and also a Writer, Storyteller, and Women-Coach in Personal Finance. She’s the Co-founder of Manasa Learning Solutions, Life Skills Training Academy for women and children.