A comprehensive guide on affordable gold investment strategies for beginners
Are you confused about where to invest your hard-earned money to secure future, financially? Well, we are sailing in the same boat. The majority of people are inclined toward gold investment strategies. The reason is that it is a reliable way to grow your wealth silently. In India, gold has always held a prominent place, not simply as jewelry or a representation of wealth, but also as a reliable, material resource that stands by your side in the face of uncertainty.
If you are planning to invest your savings in something safe & return-worthy, or someone who wants to save a bit of their salary to plan long-term security, this article is for you. In this, we will discuss how to begin investing in gold.
Why is gold still considered the ultimate form of investment?
Gold is not just another type of investment; it is one of those assets that has withstood economic downturns, currency crises, and wars. And the cherry on the top is that:
- It is accepted across the globe.
- It can be easily liquidated.
- It has nothing to do with the specific stock market or any government or its performance.
Let’s get into gold investment benefits that tell why it’s a big YES for people who have just started investing.
1. It is an umbrella for times of inflation
There are times when the value of money falls and your cost of living increases; in such cases, the value of gold is likely to increase.
2. It offers a room to diversify your portfolio
For instance, you have already invested a major proportion of money in mutual funds, stock market, and so on. You are still left with some money, you can invest in gold; it offers a room to diversify your portfolio, thereby minimising the chances of risk.
3. It has tangible value
It offers you to hold it in physical form, unlike digital currencies and stocks. It gives you peace of mind that your money is safe and secure.
4. It holds emotional & cultural significance
For the people of India, gold is more than a precious metal. It holds an emotional & cultural value as it is passed down through generations as a part of legacy or generational wealth.
Many people have a view that you need to have a large sum of money to invest in gold. But this is not mandatory. You can start with a small amount. The bottom line is you need to be consistent and pick the appropriate type of gold to purchase.
Let’s dig into the “how” of investing in gold.
1. Begin with physical gold
Physical gold is the easiest way for beginners to invest in gold, as it is reliable and tangible in form.
Under the category come gold coins and bars, which are ideal if your main aim is to invest and not also to wear. As they come with certifications of purity so there is no doubt of cheating. They are easy to store and can be sold as and when needed.
You can buy gold coins and bars online from GGC. It’s a digital platform that ensures that the products you purchase have a hallmark certification, and there is no cheating in pricing. It delivers products are purity guaranteed.
And the best part is you can start your investment as small as 1 gram and gradually increase as per your convenience.
2. Digital gold is also a flexible option
If you find storing physical gold a task, you can go for digital gold. You can buy in both small and large quantities, which are stored in a vault by providers in an amount equivalent to physical gold. Below are the benefits of digital gold:
- Can be easily converted into physical gold.
- Guaranteed 24k gold.
- Can be accessed anytime, anywhere, as it is available on your mobile phone.
- Perfect option to start a gold SIP, you can build wealth and secure your future.
It fills the gap between conventional investing and contemporary ease by fusing technology with trust.
3. Gold ETFs (Exchange Traded Funds) can also be considered
If you have a Demat account or invest in mutual funds, then this investment type can be considered. The trading of these funds is based on the stock market, as per the price which is running in gold market.
You can go for this investment type due to the following reasons:
- You do not have to worry about its storage.
- You can easily buy & sell them through your trading account.
- There is no cheating in pricing as the same are taken, which are prevalent in the gold market.
- These are generally low in cost as compared to physical gold.
The funds are more used by people who are familiar with the stock market. If you have no prior knowledge about this, you can start with physical or digital gold, and later on, invest in ETFs.
4. Sovereign Gold Bonds (SGBs) are hard to ignore
These bonds are issued by RBI. These are one of the ways to invest in gold without really possessing it physically. Let’s take a look at why they are worth investing in:
- You can earn 2.5% interest annually on your gold holdings.
- They can be redeemed at the going market rate when they mature.
- There is no headache of storage or security.
- You are exempt from capital tax if the same are kept till maturity.
The mere problem with these is that they have a lock-in period of 8 years. So, if you are planning for a short-term investment, it will not work. It is an ideal option for people who see gold as a long-term investment.
5. Gold SIP is the best option
Similar to mutual fund SIPs, there are financial institutions and digital gold platforms that provide Gold SIPs, allowing you to invest a set amount on a weekly or monthly basis.
This strategy is beneficial in two ways:
- It fosters a disciplined saving habit.
- It shields you against market swings by protecting you from price fluctuations.
So, a small amount of money, for example, ₹1000, can grow substantially over time.
Gold investment strategies for beginners
You want to start investing, but are looking for strategies that fit in your budget, then below are some of the affordable and simple ways.
1. Start small with 1gm per month
The least you can do is buy 1gm every month. By doing so, your pockets don’t even get hurt. Also, those grams add upto over a period of time, literally.
2. Bifurcate your investment plan
You can split your strategy like: 40, 40 & 20.
40% in digital gold or ETFs
40% in physical gold
20% in SGB
It gives you financial stability, security, and flexibility.
3. Purchase when prices are low
The prices of gold keep fluctuating. Plan gold buying during the time when the price is low. For instance, when the showrooms or jewelry shops have sale going on, you can buy and enjoy a significant discount. Because minor price reductions eventually have an influential impact.
Common mistakes that beginners should avoid
While it’s great to start small, a good investment also involves avoiding beginner mistakes. Things you should keep in mind while buying gold are:
- Not checking purity while buying: Always check for BIS hallmark or other purity certification when you are buying coins or gold bars.
- Not giving due consideration to making charges: If your aim is sole investment, then do not go for buying jewelry, as the making charges and other added costs don’t let you earn good returns.
- Avoiding the information of seller: Buy only from trusted and reliable sources, be it online or offline.
- Selling too quickly: Gold gives you the best returns in long run. Hence, do not be in a hurry to sell early during times of dips.
- Ignoring diversification of portfolio: Never make the mistake of investing all your money in gold. Try to diversify your portfolio for healthy financial growth. Invest up to 10% in gold.
There is no need to be scared when you are beginning your gold investment journey. You do not need to have large sums of money; all you need is patience, consistency, and, most importantly, a reliable platform.
You can follow this roadmap if you are a beginner.
- Set a monthly goal of 1000.
- Decide which type of investment you want to go with, whether physical, digital, or some other.
- Finalise a trustworthy platform to have complete peace of mind.
- Keep an eye on your assets every few months, but do not hurry & sell when you see minor price fluctuations.
- Gold gives rewards to those who are patient with investment.
And you will notice that your small beginnings have developed into a valuable reserve over time.
