For investing in gold during Dhanteras and Diwali, both digital gold and physical gold options are available. Digital gold is better for small investments and immediate liquidity, while physical gold can prove more economical for larger sums. Investment decisions should consider security, making charges, and GST.
Gold investment: On the occasion of Dhanteras and Diwali, investors prioritize investing in gold. Physical gold, meaning jewelry, coins, or bars, is attractive and used for both adornment and investment, but it incurs making charges, GST, and carries the risk of theft. Digital gold, on the other hand, can be purchased online, has no making charges, and is stored in secure vaults. For small investments and immediate sale, digital gold is convenient, whereas for larger sums, physical gold might be more beneficial for investors.
Physical Gold: Jewelry, Coins, and Bars
The biggest appeal of physical gold is its tangible existence and traditional significance. You can wear it, gift it, and profit from its appreciation over time. However, from an investment perspective, it comes with additional costs. Making charges, GST, and locker charges increase the total cost of physical gold. Furthermore, there is a risk of theft or damage. Due to these expenses and risks, the return on investment in physical gold can be affected to some extent.
Digital Gold: Small Investments and Immediate Liquidity
Digital gold has emerged as a modern alternative. You can purchase it for as little as 10 rupees. Digital gold incurs no making charges and is stored in secure vaults. The investor receives a digital proof of ownership (custody receipt). Digital gold can be bought and sold online 24x7. Therefore, if you wish to start investing with a small amount and desire immediate liquidity, digital gold is a convenient option.
Total Cost Comparison: Which is More Economical?
Digital gold is not entirely free. It incurs 3 percent GST and sometimes an annual charge of 0.3 to 0.4 percent. However, these fees are transparent and predictable. On the other hand, making charges, GST, and locker fees make physical gold more expensive. Therefore, for small investors, digital gold can prove to be a cheaper and easier option.
What's Better for Large Sum Investments?
If you wish to invest two to three lakh rupees or more in gold, physical gold might be more economical, provided you purchase it from a reliable source. However, if you intend to invest regularly with amounts ranging from 100 rupees to 10,000 rupees, digital gold is a superior option for liquidity and convenience.
The biggest advantage of digital gold is its facility for immediate transaction and sale. You can instantly sell it via an app or website and have the money transferred to your bank account. In contrast, selling physical gold can involve hassles like purity testing, value deductions, and buyback processes. Therefore, in terms of liquidity, digital gold is ahead of physical gold.
Security and Trust
Digital gold is stored in secure vaults and undergoes regular audits. Investors do not have to worry about theft or locker keys. However, its security depends on the platform and its reliability. Physical gold, being in your possession, is associated with risks of theft, loss, or maintenance.
