Gold is a very sought-after investment in India. In fact, Indians used gold so much that India is among the top three consumers in the world. Indians are fond of gathering gold in each and every form – gold coins, gold jewelry, gold bars, etc. However, thanks to technology investors can now buy gold digitally through gold exchange traded funds (gold ETFs) or gold mutual funds as well. For investors wondering if they can invest in gold funds via a systematic and disciplined manner of investing – SIP (systematic investment plan), the answer is yes. If you are one such investor who is looking to invest in gold through SIP, here are a few things that you must know.
Why invest in gold funds or gold ETFs?
There are several reasons to shift your investment avenue from traditional gold coins, gold jewelry, or gold bars to gold funds or gold ETFs. Here are a few reasons why you must invest in gold digitally:
- Safety and security – Gold funds are stored digitally in an investor’s Demat account. This safeguards the investors from any unwanted loss or theft
- Acts as a hedge against inflation – As the prices of gold do not fall and rise at a huge extent, that act as a good investment option for investors looking to hedge their investment portfolio from the currency risk and the negative impacts of inflation.
- High liquidity – Gold mutual funds are highly liquid, even more liquid that traditional gold as you can sell gold units on stock market exchange at any point of time.
- Can be used as a collateral – Gold funds are a good means to be used as collaterals against bank loans
- It helps to reduce expenses – If one would hold physical gold, they would have to pay the charges of lockers in banks to store them. However, as digital gold is held in Demat accounts, one decreases their expenses related to holding and storing gold.
How can you digitally buy gold?
You can buy gold funds via two different types of investment. They are:
- Gold mutual funds: Gold funds are a type of mutual funds wherein the mutual funds invest in shares of companies that mine precious metals such as gold, platinum silver, and other metals.
- Gold ETFs: Investing in gold ETF is equivalent to buying digital gold through DEMAT accounts which is equal to their physical amount of gold.
How to invest in gold via SIP?
SIPs allow investors to invest a fixed amount of money into gold funds regularly for a defined period of time. Investing in gold via SIP as it allows investors to deposit a fixed amount of money at regular intervals for a defined period as per their budget and convenience. Thus, investing in digital gold through SIP allows investors to build wealth in a disciplined and systematic manner.
If you wish to invest in gold funds via SIP mode of investment, you have to just instruct your banks to auto-debit a predetermined sum of money at pre-defined intervals for a given period of time. Happy investing!
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