Alternative Investment Options To Invest in Gold 2022 [MAY] | How to Invest in Gold | Alternative Investments | list of Alternative Investments

Alternative Investment Options To Invest in Gold – As the market conditions, Indians now view gold as more than an asset that can be kept for future use. Alternative Investment Options To Invest in Gold If you are planning to invest in gold as a way to broaden your investment portfolio make sure to think of other options to invest in it for less transaction cost, greater flexibility in the amount invested as well as tax-free returns , without sacrificing its liquidity.

Here are some other options of investing in gold you might want to consider. Alternative Ways to Invest in Gold

Sovereign Gold Bonds (SGB)

While India is among the biggest consumer markets for gold around the globe however, it only produces a small amount of the gold itself. Alternative Ways to Invest in Gold This means that most Indian demand is fulfilled through imports. In order to ease the burden of imports to the Indian economy, the Indian government introduced SGBs, or sovereign gold bonds (SGBs) in the year 2015.

SGBs are government securities that are issued from the Reserve Bank of India (RBI) and are backed by gram(s) of gold. The securities are sold in multiples of gram(s) of gold, with a the minimum investment being 1 grams.

The maximum investment limit in SGBs is 4 kgs per year for individuals, and the trust becomes 20 kgs. The investment is redeemable at a price equivalent to gold on the date of redemption.

SGBs are better than buying physical gold due to the lower cost of transaction, as well as guaranteed interest rates of 2.5 per cent per annum, paid every two years. Contrary to digital gold, there’s no way to convert the SGB assets into gold, as the redemption will be done in Indian rupees.

How to Invest in Gold
How to Invest in Gold

Alternative Investment Options To Invest in Gold

Accessibility:SGBs are distributed through commercial banks Post offices, post offices, broker of exchanges and security trading companies. They also stock depositories, such as that of the Stock Holding Corporation of India.

credibility:SGBs offer the highest security, as they are covered through government officials of the Indian Federal government.

Liquidity/TenureSGBs are issued with a maturation period of eight years , with the option to redeem early at the end of five years. Early redemption options may be used on the date of interest payments at any time following five years. SGBs can also be traded on the most reputable stock exchanges in India such as those of the Bombay Stock Exchange (BSE) as well as the National Stock Exchange (NSE). Due to their small volumes of transactions the price of selling at exchanges tends to be less than the current gold price. Therefore, they are less liquid than physical gold.

Price :The issue cost for SGBs is determined by the average closing price for gold of 999 purity released through the India Bullion and Jewelers Association Limited during the three day of week prior to the period of subscription. Discounts in the amount of INR 50/gram will be offered when you apply online.

MaintenanceThe management of your investment SGB is simple and not expensive since there are no storage or insurance costs are required. SGBs are stored in an account that is demat. Therefore, it is practical to keep record of investments in SGBs.

Tax Treatment:The amount of interest you pay on SGBs is tax-deductible just like other interest income and is taxed according to the slab rate applicable to you. Capital gains that are derived from maturity or redemption are exempt from taxation for individuals , but not for trusts. If SGBs are sold on the exchange for stocks and the gains are tax-deductible, they will be tax-deductible in the form of capital gains.

Benefits : SGBs can be used as collateral for loans similar to physical gold.

How to Invest in Gold

The Gold Exchange Traded Funds (ETFs)

Gold ETFs can be compared to purchasing gold in physical form but without the burden of having physical gold. It is required that investors sign up for a demat bank account and keep How to Invest in Gold the gold in a non-dematerialized form like the way investors store the mutual funds.

Gold ETFs are traded and issued in units. Each unit could be 0.01 grams, 0.5 gram or 1 equivalent to 1 gram of gold which can vary between funds. The price of gold ETFs fluctuate in line with the price of gold.

How to Invest in Gold
How to Invest in Gold

list of Alternative Investments

Accessibility:Gold ETFs are issued by fund houses, and are trading and listed on the NSE or the BSE. They are available for purchase via a stockbroker, or a security trading firm just as when you buy shares.

credibility:Gold ETFs are 100 100% supported by physical gold that is 24 carat (995 purity and more) and, therefore, they are safe. Since gold ETFs trade through stock exchanges, it enhances their credibility. In any event it is recommended to invest with an established brokerage firm.

Liquidity/TenureGold ETFs are open-ended and have no lock-in or fixed duration. Certain fund houses offer the option of redemption in gold physical. However, redemption in physical form for a value smaller that 100g is usually not feasible. Price quotes for purchase or sell are offered only during trading hours in the market.

Price:There is no entry or exit fee, however, brokerage fees are due each when you purchase or sell gold ETFs. Additionally the fund house that is the issuer of ETFs that are gold-based charges a management feethat is a cost that you pay annually for holding ETFs that are gold-based. The cost typically can range from 0.35 percent to approximately 1percent of the assets that you have in an ETF that is gold annually.

MaintenanceGold ETFs can be held on your demat account, there are no extra costs for storage or insurance costs.

TaxationGold that is held within a ETF that is a gold ETF isn’t subject to GST however, you’ll be liable for taxes comparable to those imposed for physical gold on any capital gains that you make in selling ETFs.

Benefits:Gold ETFs are accepted as collateral for the loan. But unlike physical gold, and sovereign gold bonds, it is not possible to obtain gold loans using ETFs that are gold. They are a liquidity-based investment that makes them ideal for investors, even if they have the short or medium-term financial goal.

Gold Futures

Exchanges that deal with commodities from India including. MCX, NSE and BSE offer gold futures contracts referred to by the name of gold futures. Gold futures are mostly utilized by companies involved in the manufacturing and trading of gold as well as precious metals, and import and export, and as a hedge against the risk of price.

Exchanges also provide gold futures with smaller denominations that can be adapted to the needs of investors. However the trading of gold futures can be complicated and is only suitable for experienced investors who are knowledgeable about derivatives trading.

If you are interested about the gold price in the future the gold future contract allows you to buy or sell gold on the future. The contract will be settled upon the date of maturity, however, the cost for gold is determined at the time of transaction. To mitigate the risk of volatility exchanges need you to keep an amount of margin until the closing for the agreement. The margin can range from 4 to 10% dependent on the anticipated price volatility.

Accessibility:Gold futures are offered by MCX, NSE and BSE and can be traded on the exchanges that they belong to. You can trade gold futures with an authorized broker on the exchange.

credibility:Gold futures are offered through and traded on exchanges, which boosts credibility. It is also possible to request the delivery of gold in physical form, with a purity of 24 carats, at the conclusion your contract. The exchanges apply an extremely high level of due diligence in order to guarantee the quality of the gold.

The business of dealing with gold futures requires special expertise, and it is recommended to consult an investment professional or learn the rules and regulations of gold futures prior to committing any transaction.

Liquidity/TenureThe duration of the contract for the gold future typically is between three months and one year. You can opt to end the contract during this time at the price offered by the exchange, or remain until maturity with the option of settling with the physical transfer of the gold. The physical delivery of gold is, however, limited to a handful of centers. The details on which centers are included is contained in the contract’s specifications.

Prices:Investors pay the cost of the gold contract together with any charges including exchange fees, regulatory fees, and brokerage charges. MCX provides contracts in 1-gram 8-gram, 100-gram and 1-gram denominations. NSE or BSE’s minimum offer is a 100-gram option. Investors who want to receive gold at settlement should examine the contract’s specification to determine the price payable for physical gold.

TaxesAny profits earned from the trading of a commodity within India does not fall within Capital Gains bracket. Investors have to add the profits to their total business earnings and pay tax according to their tax slabs on income.

Benefits:Gold futures is an ideal product when you have a long-term view of the prices of gold. You can lock in the price of the future without having to make a the full payment for gold. But, you’ll need to keep the margin determined by the exchange at any given the time. You also have the possibility to exit or enter anytime during the duration of the contract without incurring any management cost.

Alternative Investment Options To Invest in Gold | Alternative Ways to Invest in Gold | How to Invest in Gold | Alternative Investments | list of Alternative Investments

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