If you are planning to buy gold on this auspicious day, then read this article for some great tips.
Akshaya Tritiya is considered to be an auspicious day to buy gold. Every year during this day the yellow metal sees a surge in demand, especially in the form of jewellery. However, buying gold jewellery may sound attractive, but is not the best form of investment option when it comes to returns. There are other options like Gold ETFs and Gold Bonds which are safe and can give you better returns.
In this article, we take a look at certain important points that one should consider while buying gold, and also look at the features of other investment option for buying gold.
Invest As Per Your Financial Goal
Do not indulge in gold shopping just because there is festive sentiment attached to it. As you do for your other investments, you must ascertain your financial objective and accordingly determine how much gold you would need for your investment portfolio as well as for your future needs such as the marriage of children etc. If you want to buy gold only because of the auspicious factor, then buy a small quantity of it if and consider investing in other avenues.
Invest In Jewellery When You Really Need It
Buying gold jewellery on Akshay Tritiya is quite popular in the country as it provides the twin benefit of value appreciation as well keeping a jewellery for the long term. But it is not a practice that you should religiously follow every year as the price of the gold varies from jeweller to jeweller and depends on the price decided by a city’s jeweller association.
There are no set rules for pricing when you buy any gold ornament from the jewellers. But, you should check the purity before buying gold jewellery. You should also be aware of the resale value of the gold as jewellers ask for making charges while buying jewellery. If you plan to sell such jewellery in future, then the buyer will deduct making charges and calculate the value as per purity of ornament so your overall return will get negatively impacted and low.
Buy Gold From The Right Place
It is important that you buy physical gold from the right place to avoid any kind of fraud and to ensure the purity of the yellow metal. If you are buying gold biscuit, then consider branded and authentic jewellers whose premium of prevailing gold price is not very high, and the repurchase rate of gold is not much lower than the market rate. Avoid buying gold from the banks because they charge hefty premiums and they do not repurchase when you want to sell the investment.
Other Options To Invest In Gold
You can buy gold exchange-traded funds (ETFs) through stock exchanges and keep the unit in your demat account. Price of gold ETF is linked to the prevailing price of gold in the market. You can buy or sell gold in any trading day in which stock exchange operates. You do not get physical gold while you buy gold ETF, but you get an equal amount of gold units credited to your account. In the future, if you wish to buy gold at the prevailing market rate, then you can liquidate the gold ETF holding lying in your demat and buy physical gold from the market using that money.
Sovereign Gold Bond (SGB)
If you are looking for a long-term investment, then SGB is the most tax efficient and attractive gold investment product. By investing in SGB, you get the chance to earn capital appreciation, you also earn interest at 2.5% per annum. SGB can be pledged as collateral to raise a loan against it. If you take redemption of SGB after full tenure i.e. 8 years, then the capital gain on such investment will be tax-free.
Gold is a very good hedge against inflation, but you must not invest a large portion in this precious metal. It can give you a good return under an adverse market condition, but largely when the market is stable, gold will not give you a bumper return. So, while investing in gold, keep a long-term view and avoid investing more than the requirement as per your financial goal.