Akshay Tritiya – Is buying gold still the best way to celebrate?

This Akshay Tritiya, many of us must be excited about buying gold to mark this auspicious occasion. You may need to rethink this though as the experts say otherwise. According to the experts, it is wise to liquidate any gold that you have been saving as an investment option. This may not be welcome news to most Indian years, especially with India’s obsession with gold, but it is good financial advice.

1. Akshay Tritiya – a historic tradition

The word “Akshay” means something that never faces any diminishment. This translates well to gold y Indian standards as most Indians believe in the permanent high-worth of gold. Beginnings made on this day holy day of Akshay Tritiya or knowns to be holy if done with the purchasing of gold, as it is considered to bring good luck. It is very difficult to exit this Indian mindset and most people are dead-set on buying gold in its physical form on this day. Yet, there exist other options to invest on this day such as gold ETFs and gold bonds, if you absolutely insist to invest in gold on this day.

2. Say no to physical gold

Do away with your physical gold investment by selling it off. The sale can be made to Muthoot and other such firms as they will always provide you with a better deal than any jewelers you may reach out to. It is never a good idea to sell gold to local and unorganized buyers, make use of respectable firms instead. There are various payment options such as instant cash for any gold value up to a maximum of Rs 20000. If the sum is higher than that then you will receive the money in your bank account.

3. Instead invest in Gold ETFs and Gold Bonds

Gold ETFs:

Instead of gold jewelry or gold coins invest in Exchange Traded Funds (ETFs) – this way you can buy gold, but in an electronic form. In this way investors buy units of gold that you may sell at a later date to buy actual gold. ETFs get traded in stock exchanges where the core asset is gold. You may decide to invest in an amount as little as 0.5 gm by way of gold ETFs and this will be stored in your DEMAT account. Via this form of gold investment you do not have to worry about the purity of gold – making this transaction as auspicious as possible.

Over time you can invest in gold by means of small portions. These portions can be sold when you feel the need to buy physical gold, say for a wedding or any other similar occasion that requires you to be in the possession of real gold. ETF is the practical way to buy gold as it takes out the need for any kind of security or storage needs. You can buy gold on the internet in under five minutes.

Gold Bonds

Gold bonds are also a great way to invest in gold. The smallest investment that you can make in gold bonds is 2 gm, moreover the interest rate on the gold you hold will be 2.75% – a clear advantage over holding physical gold! Let us look at an example – instead of investing in 10 gm of physical gold, choose 10 gm of gold bond that can be bought at post offices, banks etc. The gold bonds have a tenure of eight years and after the period you will redeem the value of that amount of gold at that time. So over eight years you could have a gain of 25%!

Also, Sovereign Gold Bonds have a favourable taxation as compared to physical gold. The maturity benefit of SGB is tax free whereas gains in physical gold is subject to taxation. SBG’s if redeemed before maturity might attract some taxes according to the capital gain or loss.

4. Investing in an equity SIP is equally auspicious

If an auspicious investment if what you seek this Akshay Tritiya, choose mutual funds as they are the purest form of investment. There is minimum risks in SIPs and there is diversification of portfolio. You also have the added benefit of liquidity as you can cash the funds at the current Net Asset Value. A proven and tested financial scheme, mutual funds are a great way to invest if you are looking at automated savings on a monthly basis, with good returns.

If you really are gung-ho about purchasing gold and using it as an investment tool, consider options to gold in its physical form. There are better ways to buying gold to celebrate this auspicious Akshay Tritiya. If your end objective is to make a good investment, then choose wisely instead of following the mass hysteria for physical gold!

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