BasuNivesh now available in it’s own domain from 22nd June 2012.

I want to start this post with one good news. Within one month of start of this blog, total visitors count crossed over 500. Thanks for all who visited this blog.

Today I will share my knowledge about ways of investing in gold.

1) Physical Form: This is the one of the oldest and favorite format of investment method in India. But when you purchase gold in physical format it includes making charges and wastage. Main disadvantage is pricing which vary from shop to shop. Hence you will not get the standard price which is on spot market. Quality of the gold is also not sure. Biggest disadvantage is safe keeping of physical gold. So, it is inconvenient to buy, sell and safe keeping. Also, if you are investing aiming at your child’s marriage and the gold ornament which you purchased today may be old fashion at your child’s marriage. Again at that time you need to alter your existing gold, which will cost you more in the form of making charges and wastage. It may also  cost you wealth tax if your total wealth crosses 30 lakh. Hence for investment purpose this is not the best way.

2) In the form of Bars and coins through Banks: This also have same features as that of physical form of purchasing with additional disadvantage being resale may not be possible. Hence even though you may get purity assurance, this format of investment still have few disadvantages.

3) Gold ETFs: Your investment will be in Dematerialized format. Hence safe keeping of your gold will not arise in this case. Purity issue will not exist here as you keep in e format. Reselling is not the issue, easily you can liquidate in secondary market. Convenience of buying, selling and storage is very high. Pricing is linked to International Gold Price. Hence currency risk is more. You need to pay some annual reccuring expenses like storage, Insurance and AMC Expenses. Physical delivery of Gold only from Bombay. So, if you want to take physical delivery then it may be time consuming. It is a recommended way of investment except disadvantage being currency risk, annual expenses and physical delivery inconvenience. Tax Advantage is, it is treated like any other financial product. Hence Long Term Taxation will apply after one year.

4) Gold Mutual Funds: These are actually Funds Of Funds. Usually AMCs will invest into their own Gold ETF products. Hence in term of cost these are costlier compare to Gold ETF. But the few advantages are-no requirement of Dmat Account, even small amount like 500 can also be possible for investment.

5) E-Gold: This is emrging and favorable way of investment. Price is linked to Indian Gold Prices. So currency risk is nil. In terms of cost this is cheapest of all forms of investment. No reccuring expenses like Gold ETFs.  Physical delivery is convenient as presently around 15 delivery centers available. E-Gold is considered as physical asset. Hence for taxation purpose Long Term Capital Gain will arise only when you hold this format of investment for more than 3 yrs. But this is advisable to invest in E-Gold as in terms of buying, selling, security, pricing and purity are highly convenient compare to other forms of investment.

So, now decide which is best way to invest in Gold to diversify your investment Portfolio. Happy saving!!!!