For us Indians, gold investment holds a special place. Every household tends to have a big chunk of investment in gold, often more than any other assets that they own. While we recommend investment in gold as a means of diversification or adding more flavour to your portfolio, it also makes sense to invest in gold if you specifically require gold for utilization purposes such as weddings, gifting, making jewellery, etc. The most common way in which we invest in gold is by way of jewellery or coins/bars.

However, did you know that there are over 6-7 ways in which you could invest in gold? Here’s a list we recently made for a Mumbai-based client who was keen on doing their financial planning. The best way to invest in gold can vary from person to person:

• Jewellery: Suitable for those who actually need the jewellery for utilisation purpose. If you are not going to wear the jewellery and are bound to sell this later, do not let making charges and other costs eat into your investment.
• Coins/bars: Suitable for those who need gold in physical form but not ready-made jewellery. This a good way to accumulate gold to make jewellery later.
• Jewelry accumulation schemes: Useful for those with very limited access to developed investment options and low savings. These are schemes with local jewellers where a monthly contribution towards buying gold is taken and the jeweller adds an instalment from his side too. This is a primitive way but useful in specific situations
• Gold Mutual Funds: Another simple way where you invest in a mutual fund that invests in gold ETFs(described below). Useful for people who want to do an SIP in Gold and invest in smaller amounts over a period of time, while avoiding costs like making charges, GST, etc that physical gold may attract.
• Gold ETFs: These are mutual funds traded on the exchange just like shares. Each unit represents a specific unit of gold and can be used for regular investment in gold with limited hassles. However, a demat account and trading account are required for this.
• Sovereign Gold Bonds: These are issued by the Govt and denominated in grams of gold. These are issued for 8 years, with an exit option post 5 years. The bonds also pay a fixed interest of 2.5% along with benefitting from movement in prices of gold. If held till maturity, capital gains are tax-free.
• e-gold: This is offered by e-wallets, fintech apps and some brokerage houses as another way to buy gold without taking physical custody.

Depending on your investment capacity, financial goals, risk profile and goals, different proportions of gold can be added to your portfolio. Over a longer term, portfolios with 10-15% of gold in them are seen to withstand financial turbulence much better.