Want to invest in digital gold. Know about the cost and risks involved

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If you want to invest in gold but your low savings have been a concern then you would be surprised to know that you can invest in digital gold for as little as one rupee.

Here are four ways to buy digital gold with cost and risks involved:

E-Gold

You can buy e-gold through an existing demat account or through any e-wallet like Paytm or PhonePe. Just like an SIP, you can invest as little as one rupee at regular intervals and once you’ve accumulated the minimum units, you can either sell it online at prevailing gold rates or get the equivalent physical gold home-delivered!

The biggest risk of investing in digital gold is that there is no regulator for the product. When you buy gold the equivalent amount of gold is stored in the vault, but there is no regulator to watch out for quantity and purity of gold maintained.

Another important thing is just like physical gold you pay GST on e-gold over above the spread charges of 2-3%. Spread charge is the difference between your buying and selling cost which is used to cover expenses such as cost of storage and insurance charges.

Gold ETFs

Gold ETF’s are listed on the stock market with gold as an underlying asset. You can buy and sell Gold ETF just like any other share through your demat account. They offer higher liquidity than other digital gold.

Unlike e-gold they are regulated by SEBI and have clear guidelines relating to valuation, insurance and storage. Here you pay GST but it is put back into the scheme as input credit. As far as cost is concerned, you pay broking charges which on an average cost around 0.1 to 0.75%. This makes gold ETFs one of the cost-effective ways of investing.

Gold Funds

Now this option, unlike the previous two doesn’t even need a demat account to transact. Gold Funds invest in gold ETFs and are offered by mutual funds. But it can be expensive as you need to bear the expenses of both gold ETFs and gold funds.

Sovereign Gold Bonds It is one of the most popular ways of holding digital gold. SGBs are government securities and denominated in grammes of gold. There is a dual benefit here as you can earn 2.5% per annum simple interest and market value of gold at the time of redemption. That’s not all. If you buy it online and pay digitally, you can earn an additional discount of Rs 50 per gramme.

It comes with a lock-in period of five years and are redeemable after eight years. Hence, one of the risks is if gold prices decline at the time of redemption you have no option but to redeem at the prevailing market prices.

Stop accumulating big money for little gold. Add glitter to your portfolio through digital gold.