Tips and Tutorials Blog

Learn How To Invest In Gold In India with SMIFS – Know about 4 Investment Options for Gold


Gold is one of the most conventional methods of investing. An individual can invest both in physical gold (like gold jewelry, gold coins vaulted gold, etc) and digital gold (like Gold exchange-Traded Funds and Gold Mutual Funds).

Before, the only option to invest in gold was in physical form. But it was constrained by things like extra manufacturing, designing, or storage costs. In order to get past these limitations, an investor can now buy digital gold via mutual funds and exchange-traded funds (ETFs).   

Why should one invest in Gold?

gold as moneyFor risk-averse investors, buying gold in India can be the better option. The fact that gold has no association with other assets and is by far the biggest benefit of investing, it can therefore serve as a safety net for one’s portfolio’s volatility.        

1. Gold as money

Purchasing gold is no longer a difficult undertaking, as one can invest in gold through a variety of options. This asset is ideal, in case crisis hits. Its role as money makes it more valuable than any other currency for it has been in existence for as long as 3000 years.

2. Its value can never be zero

In India, one can invest in gold to produced profits. There is a high chance that gold as an asset will never go zero (at least it never went in the last 3000+ years). Thus, this asset can act as a hedge during global uncertainty.

3. It helps in beating inflation

Despite the best attempts, inflation will always be a problem. Perhaps the only asset that can hold its value and combat inflation is gold. This is due to the fact that the price of gold rises along with the increasing living expenses and reaches frequently to its maximum levels during times of strong inflation.

4. It has a high liquidity


This asset is easy to sell and can be carried anywhere. Due to its high liquidity, gold gives investors the chance to exchange it in times of need or when they require money. It is easy to sell this valuable metal even during the most difficult times because of the ongoing desire for it.

5. They are good for portfolio diversification

The investing portfolio needs to be diverse since it helps to balance the risk. Traditional investment alternatives like equities have an inverse relationship with gold’s value. In this manner, gold investments in India might serve as a safeguard against market instability.

Differencing between Gold, Gold ETF and Gold Mutual Funds




·         It is merely investing directly in actual gold. ·         It resembles investing directly in gold in different ways, but here the purchaser buys proportionate ownership in the collective vault rather than actual gold. ·         The investments are made in firms, instead of the gold that the firm deals with.
·         A Demat account is not required for investing in gold. ·         A Demat account is required for investing. ·         The investor does not need a Demat account to invest in Gold MF.
·         Gold ETF prices are directly impacted by changes in gold prices. ·         Gold ETF prices are directly affected by changes in gold prices.


·         Changes in the price of gold have no direct impact on gold mutual funds.
·         There is no investment fee. However the buyer is liable to pay fees if the gold is purchased as jewelry or  gold bullion.


·         Because asset management and brokerage fees are a part of gold investments, returns are lower than the gold’s real value.


·         The management of the funds entails a fee. Additionally, entry and exit fees reduce the overall returns below the real growth in gold’s value.
·         Carrying or keeping the physical gold entails the danger of theft or burglary. For this, the buyer will have to pay the price.


·         ETFs simplify the gold trading process because the buyer doesn’t need to carry or store any real gold.


·         Since the buyer of a Gold MF does not need to carry or keep any physical gold, there is no risk of theft or burglary.
·         No paperwork involved. ·         Paperwork is involved. ·         Paperwork is involved.
·         Not impacted by shifts in the securities market.


·         Not impacted by fluctuations in the securities market.


·         The price of gold stocks declines when the securities market is bearish.
·         No choice for Systematic Investment Plan (SIP)




·         No SIP choice


·         The option to invest in gold through a Systematic Investment Plan is provided by gold mutual funds, which makes the investment more reasonable and planned.
·         Best suited to investors with traditional investment preferences.



·         The best choice for investors that enjoy trading intraday. It’s a definite no for hesitant investors.


·         Best suited to investors with a flair for the securities market and a risk-taking attitude.


Other investment Methods

Even if the aforementioned methods of gold investing have grown significantly over the past several years, there are still some other methods that a potential investor may choose from.

1.     Investing solid gold

Investing money in physical gold objects like gold coins, biscuits, or bars is a classic way to invest. The risk of counterfeit is lowest for this purest type of purchase, but the risk of theft and storage involved is highest.

2.     Gold Scheme

gold as an asset

Typically, jewelers provide numerous gold schemes periodically for their loyal consumers. Similar to a SIP, an investor must commit to a set of time-based investments in the gold plan. When the investment reaches maturity, the investor has an amount of money that they can use to buy gold.

3.     Digital Gold

In recent times, digital gold has become very well-liked in the financial industry. Like any other digital transaction, buying and selling gold is possible on fintech platforms. Investors should keep in mind that not all platforms sell digital gold, and that one should carefully research the market before making an investment to prevent fraud.

4.     Gold sovereign bonds

The Indian government created the sovereign gold bonds in 2015, under the supervision of Reserve Bank of India. It was started with the intention to provide a different way to invest in gold. 

Each sort of investment has advantages and disadvantages. Like any other investment option, gold should be chosen cautiously while bearing in mind all of its restrictions.

Open free demat account with SMIFS and enjoy the benefits of hassle-free trading.

Call us at 9830121215 or email us at

Leave a Reply