Sovereign Gold Bond (SGB)
SGBs are government securities, denominated in grams of gold. These are an alternative to having physical gold. Investors are required to pay the issue price in cash, and the bonds are redeemed in cash at maturity. It is considered a safe way to invest in gold especially for those with a long investment horizon of 5-8 years.
Reserve Bank of India releases
The Reserve Bank of India issues SGBs several times in a year and fixes a price for each issue. Users can also buy or sell SGB in the secondary market. The bonds also offer interest at the rate of 2.50 per cent (fixed rate) per annum on the investment amount. The interest is credited to the investor’s bank account semi-annually and the final interest is paid on maturity along with the principal.
Gold ETFs allow you to invest in gold in dematerialized form, which can be bought and sold on a stock exchange just like stocks. Gold equivalent in physical quantity is deposited electronically in the demat account of the buyer. These stocks are listed on the exchange, where one can get real-time updates about their prices. ETFs have no exit load, which means investors can buy or sell units at any time during market hours.
Gold Mutual Fund
Gold Mutual Funds are open-ended funds that allow citizens to invest without a demat account. Gold fund units are determined on the basis of Net Asset Value (NAV), which is disclosed at the end of business hours. In this scheme, experts professionally manage the investments to make money and reduce the risk.
Gold Fund of Funds (FOF)
These are funds that invest in a basket of mutual funds. They pass on the expense ratio of the funds along with their charges to the investors, which makes it a bit costly. Lastly, know that investing in gold is considered better for several reasons. These include safety, liquidity, best return, etc.