Gold Buying Tips: Buying gold on the occasion of Dhanteras and Diwali is considered auspicious. But now investors can choose not just jewellery, but also safe and tax-friendly options. Let us know about two such options…
Gold Buying Options: The time of Dhanteras and Diwali is considered the most auspicious for buying gold. Lakhs of people buy gold on this occasion, as it is considered a symbol of wealth and prosperity. But now investors are preferring to invest in gold smartly and not just in jewellery. In such a situation, Gold ETFs and Sovereign Gold Bonds (SGBs) prove to be safe and tax-efficient options. These investments not only provide portfolio diversification but also provide tax benefits under the Income Tax Act. Let us know their benefits…
Gold ETFs: Investing gold in stock market
Gold ETFs are mutual fund units that are traded on a stock exchange and track the price of gold. This means that you can invest in it without buying physical gold.
Gold ETFs Benefits
- Investing in Gold ETFs gives you capital gains tax benefits.
- They have liquidity, meaning they can be sold immediately on the stock exchange.
- There is no worry about theft, loss or original purity.
- Investment can be started even with a small amount.
How to invest in Gold ETFs?
The price of gold may increase on occasions like Diwali, so do SIP or transaction in ETFs gradually. According to experts, there are tax benefits if held for long term. If there is a long or short term capital loss in a gold ETF, it can be set-off against other gains. Unused losses can be carried forward for up to 8 assessment years.
Sovereign Gold Bonds: RBI’s safe option
Sovereign Gold Bonds (SGBs) are issued by the RBI and offer fixed interest of 2.5% per annum depending on the rise in the price of gold. According to experts, SGBs are great for long-term investors as they offer tax-free returns on maturity.
Benefits of SGBs
- Is tax-free on maturity. There is no capital gains tax on redemption after 8 years.
- No fear of theft or loss compared to physical gold.
- Investors get good returns in the long term.
How to invest in Sovereign Gold Bonds?
- If you need money in less than 5 years, you can sell SGB in the secondary market.
- Before buying on Diwali, it is important to check the RBI website and date.
Physical Gold vs Digital Gold
| factor | physical gold | Gold ETFs,SGBs |
|---|---|---|
| Safety | threat of theft | Safe, in bank/stock exchange |
| tax | LTCG Tax + Making Charge | Tax benefits and capital loss setoff |
| liquidity | Difficult to get instant cash | can be sold immediately |
| Expenditure | Making Charge + Storage | no extra cost |
Disclaimer: This article is for information only. The information given here is not investment advice. Please consult your financial advisor or investment expert before investing in Gold, Gold ETFs or Sovereign Gold Bonds (SGBs). Investing involves risk and past returns are not a guarantee of future returns.
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