In India, most investors still consider gold as a safe investment option. Investors typically bet on physical gold—typically in the form of jewelry, coins, or bars. The reason behind this choice is more than just investment; Tradition and trust built over decades also contribute to making physical gold a unique and sought-after commodity.
In terms of returns, gold has historically performed strongly over time. According to India Bullion and Jewelers Association data, gold has given annual returns of about 9–10% in the last 15 years, and about 12% annually in the last 10 years. As a result, it remains a preferred choice among the common people. Along with physical gold, gold ETFs are also becoming popular among investors. Let us know about both these investment options in detail.
physical gold
When buying physical gold, investors should keep several things in mind, including making charges. For many pieces of jewelry, these making charges can be as much as 25% of their price. Additionally, investors often have concerns about safe storage of gold and testing its purity. Additionally, when it comes time to sell, investors often do not receive full market value, which can lead to financial losses.
Gold ETF
Investing in Gold ETFs is a very easy process for investors. Launched in 2007, Gold Exchange Traded Funds (ETFs) have made investing in gold much easier. These funds are traded in the stock market, making the process of buying and selling easy and convenient. In terms of returns, over the long run—especially over a 10 to 15 year period—gold ETFs have performed almost at par with physical gold. However, returns may be slightly lower due to fund management costs, which typically range between 0.3% to 1%.
Which option is better for investors?
For an investor looking to invest for the long term, Gold ETF can prove to be a better option. The investment process is easy and transparent, and the returns are equivalent to physical gold. On the other hand, if you have an emotional attachment to gold or are planning to gift it to someone, you can invest in physical gold.