How should you invest in Gold this Akshaya Tritiya?

Indians have cherished holding physical gold for ages due to its intrinsic value and its ability to tide over financial emergencies. There are two different ways of investing in gold – physical and digital. As per tradition, making any new investment during Akshaya Tritiya is considered auspicious, especially buying Gold. You can buy it in the physical form through jewellery, gold coins, and gold bars. Whereas digital gold assets include Gold ETFs, Digital Gold, Sovereign Gold Bond and Gold Savings scheme.

Owning gold in its physical form has its own set of challenges; which include concerns regarding purity, safety and high costs due to making charges in tandem with the latest designs. Additionally, in the light of the lockdown restrictions, jewelry shops may be open for fewer hours posing a setback to the gold buying tradition.

In the light of these drawbacks, which are the options investors could consider? This article explores the three options of Gold ETFs, Sovereign Gold Bond & Gold Savings Scheme.

Gold ETFs

Gold ETFs are exchange-traded funds that track the domestic gold price. It was launched in the year 2007 and since then has rose to popularity due to high liquidity and ease of trading.

You can invest in Gold ETF using a DEMAT account and can be redeemed at the prevailing price of Gold. These ETF units are backed by physical gold that is 99.5% pure, with each unit representing ½ or 1 gram of gold.

Advantages of Gold ETF

  • Backed by physical gold of 99.5% purity
  • Easy liquidity; can be redeemed at the prevailing Gold price
  • Transparent and tracks the real time price of Gold

Disadvantages of Gold ETF

Not all funds offer the option of redeeming in physical gold

Gold ETF is a hassle-free option to consider and due to its high liquidity, you can hold Gold for the tenure you need; be it short, medium or long-term.

Sovereign Gold Bond

Sovereign Gold Bonds are securities issued by the RBI on behalf of the Government. It helps you to gain capital appreciation and receive interest income for a fixed term of 8 years. The price is determined by the Indian Bullion and Jewelers Association Limited (IBJA) based on the average of the last 3 days closing prices of 99.9% purity Gold.


  • Relatively low risk due to Government backing
  • Since Sovereign Gold Bond scheme comes with a lock-in of 8 years, it is an ideal investment if you are looking for long term investment.
  • It can be used as a collateral to avail loans upto 75% of the market value of bonds.


  • You have to pay income tax for the periodical interest income as per your income tax slab rate.
  • Lock-in period of 8 years makes it a relatively illiquid option when you are in need of money.
  • You can invest a maximum of upto the equivalent of 4kg of gold.

Investing in SGB is an option to consider as it provides capital gains along with interest income. But you need to be cognizant of its lock-in period and taxation implications before investing.

Gold savings schemes
Gold or jewelry savings schemes is where you have to deposit a fixed amount every month for the period chosen. When the term ends, you can buy gold (from the same jeweler) at equivalent to the amount deposited This conversion is done at the gold price prevailing at the time of maturity.

Advantages of Gold Savings Scheme

  • Option to buy gold in a convenient installment
  • You can enroll for as low as Rs.500 per month
  • You get an option for discount/cash depending on the terms agreed with the jeweler


  • High making charges while redeeming, which can go as high as upto 30% of the value of the Gold jewelry.
  • You need to buy with the same jeweler which means no room for negotiation due to high-markup on Gold jewelry

Investing in Gold Savings Scheme is an affordable option for those who do not have a lumpsum to buy Gold jewelry, but you need to look through the fine print before investing.


This Akshaya Tritiya, evaluate the gold investment options and invest wisely, considering your investment horizon, liquidity needs and risk profile. Since venturing out for jewelers shopping is not advisable during this time, it may be a better decision to invest in Gold digitally this year.

Stay safe and Happy Akshaya Tritiya!

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Is it a good time to start sip in Gold? if yes, then which form of gold is more suitable and why ? could you please through some light on this. Thanks

Thank you @AaryanTheRider for your query. Gold continues to act as a portfolio diversifier. The best thing with an SIP (systematic investment plan) is that you need not time the SIPs, it’s counterintuitive to the utility of the SIPs.

You may consider starting an SIP in Gold given the convenience and ease of investment. Unlike physical gold, starting an SIP in Gold is an efficient form of investment as you can avoid the storage hassles in the form of paying for a locker. You can also avoid paying high premiums associated with physical gold due to the design and making charges.

You can start an SIP in Gold Mutual Fund. Gold Mutual Fund is actually a Gold Fund of Funds with an underlying investment in Gold ETFs, which is, in turn, is backed by physical gold. Gold ETF tracks the domestic price of Gold. The NAV (Net Asset Value) of Gold Fund of Funds is declared at the end of the trading day similar to other mutual funds. You can invest a minimum of Rs 500 per month. An allocation of 10-15% to gold usually helps from an overall portfolio diversification perspective.

To build the desired allocation to gold, an SIP is always a good way to build it. Given that you are intending to allocate using SIP, you should start it right away as you would use any volatility in prices to your advantage by averaging out your costs.

Hope this answers your query about starting an SIP in Gold.

I work with a strategy on Gold ETF rather than SIP which is not an effective way of investing. See the screenshot if you had invested in Gold fund with SIP method…6.8% in past 10 yrs. Forget equity, even debt funds can fetch you better returns if you track g-secs. Active investing can generate that alpha for you if you put a little efforts rather than putting investments in auto-pilot mode with SIP.

Thank you @Quantum_AMC @CoolBird for your responses, that will help me in my decision.