5 Ways Seniors Can Invest In Gold For Post-Retirement Income

Although jewellery, coins, and gold bars are the oldest methods to invest in gold, the contemporary world offers many avenues for gold investing, such as ETF, digital gold, etc.

Outlook Money
November 3, 2023
Gold Bars

Gold Bars

There are many ways to invest in gold. Historically, people have been buying gold for jewellery or investments as the yellow metal can retain its value regardless of the market’s various ups and downs. In recent years, many gold-related investment instruments have emerged, offering liquidity and long-term earning opportunities for customers, including senior citizens. 


Now, with the festive season approaching, the gold market is expected to draw more customers. 


Let’s explore different ways to invest in gold. 


Physical Gold: The first picture that comes to mind regarding gold is gold jewellery. It is the most common form of gold, but not the only one. Gold jewellery, coins, and gold bars are the oldest methods to invest in gold. But, there is always an issue of storage similar to any other physical asset. Finding a safe place to store is a challenge, and keeping it in the bank means paying locker charges and the hassle of visiting the branch every time there is a need to use the physical gold. There are also charges while buying new jewellery. 


Digital Gold: Digital gold can be purchased online from the sellers directly, such as MMTC-PAMP, Augmont, and SafeGold, or through payment apps like Google Pay, phone Pe, etc., which have tied up with the gold brands, or from jewellers. It is a convenient method to invest in gold without bothering about storage. One can buy digital gold for as low as Re 1 and can redeem it in exchange for gold coins or cash. The gold bought is safely stored in the designated vault by the seller. A Goods and Service Tax (GST) will apply while buying digital gold.  


Sovereign Gold Bonds (SGBs): Sovereign gold bonds (SGBs) are government-backed instruments. It offers guaranteed interest income at 2.5 per cent per annum. The SGBs have eight years of maturity but can be redeemed prematurely after five years. However, if one needs the money earlier, it can be traded on the stock exchange. One can also take a loan against it. An individual can buy a minimum of 1 gram and a maximum of four kilograms of gold under SGB in a year. The interest earned on SGB is taxable, but capital gains are exempted. The bonds are issued periodically at RBI-specified rates. SGBs can be applied through the RBI Retail Direct Portal and banks, including the State Bank of India, HDFC Bank, Union Bank, etc..   


Gold ETFs: Gold exchange-traded funds (ETFs) invest in gold bullion, which means gold coins and bars with a minimum purity of 99.5 per cent. The first Gold ETF was launched in India in 2007. To invest in Gold ETF, one must have a demat account. ETFs invest in the physical gold, and are passively managed. Here, brokerage houses can charge for the transactions. The ETF can be traded anytime during market hours. Gold ETFs offer relatively high liquidity. 


Gold Mutual Funds: Gold mutual funds invest in Gold ETFs. Unlike Gold ETFs, a demat account is not required for investing in gold mutual funds. One can buy it from the asset management companies (AMC) or the intermediaries. The prices are determined at the end of the day.  

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