Investment in Gold: A way of meeting Portfolio Target

Investors have plenty of options available to them these days. Those who are interested in buying gold in physical form can buy from jewellers, banks or accumulate gold through monthly schemes offered by jewellers . If you want to accumulate paper gold, you can buy exchange traded funds dedicated to gold or open ended gold savings funds.

Investment in Gold

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Then there is egold from the National Spot Exchange; and Reliance My Gold Plan, where you can invest regularly but get physical gold at the end of the tenure. "Depending on consumption and investment needs, gold can be bought in either physical form or electronic form," says Amar Pandit, founder & CEO, My Financial Planner.

BUYING PHYSICAL GOLD

Many Indians prefer owning the metal physically. For such individuals, the traditional, simple and easiest way to buy gold is from the local jeweller. However, this may not be a very efficient way to invest in gold.

"Jewellers could levy a mark-up over the market prices and there are other issues like purity and storage," says Harshvardhan Roongta, CFP, Roongta Securities. If you buy jewellery, the making charges could vary from one jeweler to another. Finally, when you sell the ornament or jewellery, you will get the prevailing market price of gold minus all these extra charges. Also, safe-keeping physical gold is risky, that is why experts recommend accumulating gold in electronic form.

BUYING GOLD ELECTRONICALLY

"Investors could look at buying gold through mutual funds as they are well regulated and there are no issues of purity and storage," says Chirag Mehta , fund manager at Quantum Mutual Fund. You can buy units though the ETF route if you have a broking and demat account. If you do not have a demat account, you can invest through a gold savings fund offered by most fund houses.

BUY REGULARLY AND TAKE DELIVERY LATER

Many investors accumulate gold for a future event or need. If you have time on your side, financial planners recommend you use a scheme like Reliance My Gold Plan (RMGP) or an e-gold plan. For buying gold through RMGP, you need to set aside a fixed amount every month. For example, if your monthly payment is Rs 2,000, Reliance My Gold Plan will buy gold worth Rs 100 through 20 instalments every month, giving you the benefit of averaging. "The investor gets the benefit of daily averaging methodology," says Vikrant Gugnani, head (broking & distribution), Reliance Capital.