What factors should you consider before putting your money in gold investments?

New Delhi: As women, we are raised to think that managing finances is a man's responsibility and is somehow not our issue. One of the most ingrained unwritten laws of "lady-like etiquette" is “Don't talk about money”. 

However, 49 percent of investors are women, across all age groups, according to the LXME's Women and Money Power Report 2022. This is so because women feel most at ease with the asset class of gold, which is now used as “proxy cash,” “emergency funds”, and “retirement funds”. Though they don't always do it in the wisest or most informed manner, today's women are seeking to improve their financial health and are adopting gold as a tried-and-true safety net.

Indian culture has a long history of investing in physical gold, whether through familial customs or lucky occasions like festivals. But despite its many advantages, it is now widely acknowledged that buying gold jewelry and actual gold carries a significant markup. Additional costs for producing, designing, and storing gold tend to reduce its value even after paying a three percent GST at the point of purchase.

Despite this, India continues to be the world's top gold consumer, with Indian households owning over 11 percent of all gold. Gold has long been regarded as one of the most valuable assets and is essential to include in one's portfolio as a safety net.

Let’s go digital

Today, every wise investor is aware of the advantages of digital gold investments. It is a hassle-free form of investing that is reasonably valued. Digital gold can be purchased in a number of forms, including sovereign gold bonds, gold mutual funds, gold exchange-traded funds, and digital gold plans, to mention a few. There are so many options available that it may be difficult to choose wisely. Here is your go-to manual for making wise gold investments.

Sovereign Gold Bonds (SGBs)

Sovereign Gold Bonds (SGBs) are a wonderful choice for investors wishing to make a lump sum, long-term investment (lock-in period - five years; maturity - eight years) in gold with an added interest income of 2.5 percent every year. They are one of the most profitable ways to invest in gold. The Reserve Bank of India (RBI) has issued them on behalf of the Indian government. It is comparable to purchasing actual gold in certificate form. It's a cost-effective approach to increase the amount of gold in your portfolio, and some advantages include the lack of GST, making fees, theft risk, and insurance costs.

Gold ETFs

Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE), much like any other stock of a company. ETFs for gold invest in 99.5 percent pure gold. These are the finest investments for anyone looking for simple liquidity options, as well as short- and long-term investment/trade possibilities. Investors may easily sell their ETF units on the stock market with no entry or exit load fees.

Gold mutual funds

Gold mutual funds are mutual funds that make direct or indirect investments in gold. Gold mutual funds make investments in physical gold, gold ETFs, and the stock of gold distribution and mining firms. Investors can start with as low as Rs 100. These are suitable for investors looking for a liquid way to invest in gold who want to make modest gold investments. Investors can also make recurring contributions to gold mutual funds by setting up a SIP. The fact that a skilled fund manager makes judgments in order to produce profits is fantastic for investors.

Digital gold plans

With digital gold plans, you may purchase, sell, and accumulate pure gold in fractions at any time and from any location in an efficient and practical manner. With as little as one dollar, you can buy digital gold! It is ideal for people who want the benefits of buying gold and the ease of receiving physical delivery at a later time. Investors are able to make very few investments, but they must be very careful when selecting the platform because digital gold is not regulated by any financial authority.

Across all instruments, the tax effects are largely constant. Gold is taxed at slab rates if it is held for less than 36 months. While a flat 20 percent tax rate is applied on gold held for more than 36 months, with indexation benefits, a surcharge (if applicable), and a four percent cess.

The aforementioned sustain only applies to SGBs if the instrument is sold after five years but before eight years. If not, the corpus received at maturity is tax-free while the interest income is fully taxable.

As times change and more options become accessible, women are taking charge of their financial decisions with a higher level of financial awareness. Women continue to have a solid emotional connection to gold, and they are successfully moving towards wise gold investment!