While investing in gold, you should keep safety, liquidity, and returns in mind just like your other investments. Gold prices fluctuate depending on global and domestic economic factors. If you are buying gold, then you have to make arrangements to keep it safe and also take care of its purity.
It is generally suggested that your gold investment should be up to 5% of your portfolio, or up to 10% if you have more risk appetite for it. But it is important to keep in mind one thing, do not go out of your capacity and invest in it or do not compromise with your other goals to invest in gold.
Physical Goldie Gold Goods, Gold Exchange Traded Funds (ETFs), Sovereign Gold Bonds, and Digital Gold. Buying gold goods is easy, but ensuring its purity and arranging safe storage is not less of a challenge that will cost you a little money. It can be purchased as jewelry, coins, or biscuits. There is no limit in the matter of purchasing gold articles. But, for tax, preserve its receipt and tax invoice.
There are two other forms of gold investment that are safe and easy to purchase. You can invest in Gold ETF for a minimum amount of 1 gram and you can also resort to a lump sum or a systematic investment plan (SIP) to invest in it. Unlike gold goods, gold ETFs do not worry about the purity of the gold as they are bought in Demat form.
Sovereign Gold Bonds (SGB), on the other hand, are government securities issued by the Reserve Bank of India (RBI). An SGB can be purchased in one gram of gold multiple. In the case of SGB, the purity of gold is not much of a concern compared to the gold goods as the bond price is linked to the price of 999 purity gold published by the Indian Bullion and Jewelers Association (IBJA). SGB earns interest at a rate of 2.5% per year. In an Emergency, SGB can be taken as a loan against collateral.