Publicly traded company stocks primarily investing in gold can significantly add to your investment portfolio. Most financial experts will advise you to retain a small portion of your investments in gold for various reasons.
When other industrial sectors suffered significant losses due to the global impact caused by the Russia-Ukraine War, gold stocks of prominent Indian companies like Titan continued to rise till they grew by 3%. Read on to learn the best gold investment options where you can consider investing to expand your wealth.
Before you start any investment, we suggest you to prioritise evaluating the risk-to-reward ratio. Though gold investment has retained its popularity throughout history, there are certain factors that you must address if you wish to mitigate the associated risks and gain maximum returns.
Where most people consider buying jewellery the go-to option for gold investment, you can multiply your benefits by developing an investor's perspective. That being said, following are the few popular ways to invest in gold in India:
Gold ETFs and mutual funds
Gold Futures Contracts
Here, you will learn how to invest in gold stocks. Simultaneously we will mention a few great performing stocks that have come to the limelight in recent years.
We have listed 6 of the most popular and reputed jewellery brands in the Indian market whose shares are publicly traded. These include:
This parent company is the largest jewellery retailer in India, featuring popular house brands like Tanishq, Caratlane, Mia and Zoya. So if you are searching for long-term gold investment options, buying gold stocks from the Titan Company can be an ideal choice.
It even used to be one of the most preferred stocks of Mr. Rakesh Jhunjhunwala, who was considered the Big Bull in the Indian stock market.
Muthoot Finance acts as a lender who provides secured personal loans to borrowers who pledge their valuable gold belongings to the company. This Kerala-based organisation does not deal with gold bullion and only accepts household jewellery as mortgage.
One of the newest additions to the Indian stock market exchange, the Kalyan Jewellers, listed its shares on 26th March 2021. Securing a record revenue of Rs. 10.8 Crores in the fiscal year 2021-22, Kalyan Jewellers successfully operates brands like Tejasvi, Laya, Anokhi and Rang.
Apart from gold, this company sells a variety of precious stones like ruby, diamond, sapphire, etc., across the country.
The primary business activities of Rajesh Exports include gold refining and exporting products like handmade jewellery, electro-formed jewellery and tube jewellery. In addition, they are also involved in the retail jewellery business under the name SHUBH Jewellers.
The Manappuram Finance Ltd. operates as an NBFC that offers secured credit in the form of gold loans to those who fulfil their credit eligibility criteria. The credentials are simple, so people from lower economic classes can meet them easily.
The majority of this company's client base is from the U.K. and the U.S. Besides selling fashion jewellery, they also deal with home essentials and beauty products, thereby diversifying your investments further.
Indians are well acquainted with buying gold; many of us even inherited this asset class in the form of jewellery from our parents or grandparents. However, when we tried to sell them to fund emergency needs, certain factors like impurity often affected returns.
The drawbacks of physical gold are the main reasons why people are now investing more of their hard-earned money into gold stocks. In addition, buying gold stocks gives you the following benefits:
Tax benefits: Your tax liabilities get reduced if you hold gold stocks for more than one year in your portfolio starting from an initial purchase. Thus you become eligible for long-term capital gains. Again, funds like the SBI gold loan are treated as a non-equity product that ensures an assured dividend income and capital appreciation over time.
Easy liquidity: Digital gold assets can be sold at the current market price whenever the rate seems justified to the holder. Moreover, there are no hidden charges or processing fees, and the selling amount gets transferred to your account through a secured gateway.
Hedge against inflation: Investors recommend including gold stocks in a person’s investment portfolio as, historically, it has recovered losses from low-performing sectors in the stock market. Getting reasonable profit from the gold investment options can eventually help you beat inflation.
Small capital requirement: Gold stocks are not as expensive as bonds, allowing a budding investor to start small. It is always advised to bring in additional funds for investment once you become more familiar with this instrument.
While we dive deeper to discuss the best possible options for generating returns from buying gold, it would be unjust if we do not touch on gold funds and gold ETFs.
Clients who do not own a Demat account can still buy digital gold by investing in gold funds. The fund managers keep track of well-performing ETFs in the market to execute successful purchases. Hence, as a retail investor, you become free from the hassle of choosing ideal companies to buy unit stocks.
Regardless of the advantages mentioned earlier, many prefer to choose gold ETFs as their favourable investment instrument. Therefore, one must gather a clear idea on the topic of gold ETF vs gold mutual fund.
In contrast to gold funds, exchange-traded funds or ETFs are passively managed and comprise 99.5% pure gold as their financial product. Here, if you buy 1 unit of any gold ETF, it implies that you are now the owner of 1 gram of gold. Also, you need a Demat account to hold ETF belongings.
It is essential to gain sufficient knowledge before buying gold, as it is a costly commodity. Therefore, here are some measures you should take before exploring various gold investment options:
Consult an expert: Most retail investors skip this step as it involves additional costs in the form of fees charged by the financial expert. However, hiring one can help you earn optimal returns.
Plan an investment strategy: Retail investors can buy gold stocks by choosing any of the three methods: gold ETS, mutual funds or investing in companies. Each method has pros and cons; hence, personal research is mandatory to determine which way suits your investing nature.
Start small: Instead of setting aside a hefty sum well in advance, consider starting with modest investments, as volatility in the gold market can be overwhelming for beginners.
Learn about the tax implications: Gold stocks are considered non-equity products; hence investors enjoy the benefits of long-term capital gains.
In recent times the rise of U.S. Dollars has proven to be troublesome for the shareholders who have invested in gold-selling companies. However, those who have distributed their wealth in gold mining companies have not suffered the price tumble. This is because such companies manage bagging profit by adjusting the overall cost of mining when gold prices go up.
Hedging your portfolio against the Dollar's weakness is possible when you regularly track the market or hire an expert. Lastly, while finalising an investment, you must thoroughly review the company’s background to assume its performance in recent years.
The discussion revolved around some of the best-performing gold stocks you can consider buying. However, we always recommend you conduct personal research before starting any investment. Apart from gold funds, if you wish to participate more actively in gold assets, then gold ETFs may be the more suitable option for you. You need to register on an online brokerage platform and create your Demat account to buy and sell gold ETF units.
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Buying gold stocks eventually helps you to diversify your investment portfolio. Also, gold stocks may act as a hedge when other market sectors are not performing well in times of economic crisis, global or political unrest, etc.
Yes, gold investment is the go-to option for many retail investors because of its high liquidity. Moreover, the gold industry accounts for 1.3% of the Indian GDP. Thus, if you are optimistic about the growth of the Indian economy, investment in gold can benefit you.
You can invest in gold stocks by buying shares of gold-selling companies in the form of gold ETFs. However, you can make SIP or lumpsum investments in gold funds even if you do not have a Demat account.
The safest way to buy gold is through reliable online marketplaces and applications that list gold stocks. Gold-selling companies listed there deal with 99.5% pure gold.
With respect to all the auspicious occasions in India, buying gold during Akshay Tritiya or Dhanteras is favoured by astrologers. However, when we talk about gold stocks, purchases should be made when the market rates are flat.