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4 Best Ways to Invest in Gold Online in 2020

Gold sovereign bonds, digital gold, gold ETF and gold funds are some of the better ways to invest in gold.

invest in gold online

Gold is considered as a safe haven asset and it can help to reduce the risks in your portfolio. Given the technological advancement, you can now invest in gold online through various methods. Sovereign gold bonds, digital gold, gold funds and gold ETFs are some of the investment options through which you can invest in gold online.

As Indians, we are very fond of gold. Most people buy physical gold, mostly as jewelry. However, it may not be an effective way to take exposure in gold.

Advantages of investing gold online

  • The gold bought online is pegged against pure gold of 999 purity. This means that you don’t have to worry about the purity of gold.
  • Investing in gold online is free from theft. So, you can sleep without worrying about your gold getting stolen.
  • Online gold investment options does not require any storage cost such as locker charges as you don’t require a locker when you are investing in gold online.
  • While selling your gold jewelry, the amount that you will receive will be less than the price at which you bought the gold ornaments. As in addition to the gold prices, gold ornaments include heavy making charges. However, there are no making charges when you invest in gold online and you get the returns based on the gold prices.
ways to invest in gold online
Ways to invest in gold online

Invest in Sovereign Gold Bonds(SGB) online

Gold sovereign bond is the best way to invest in gold online. SGB allows investors to participate in the gold price movements. The Reserve Bank of India issues sovereign bonds from time to time.

Features and benefits of sovereign gold bonds

  • Gold sovereign bonds are investment options and not meant for consumption.
  • Each gold bond represents one gram of gold of 999 purity. The price of the bonds reflects the prevailing gold price.
  • In addition to the gold price movement, it pays an interest of 2.5% per annum paid on a half yearly basis.
  • You can apply for gold sovereign bonds online through your bank’s website and get discount of Rs.50 per bond.
  • The minimum investment limit is one gm and the maximum limit for retail investors is 4 kg. i.e. 4000 units.
  • The investment tenure of sovereign gold bond is 8 years and you can exit after five years.
  • Investors don’t have to pay capital gains tax at maturity.
  • Demat account is not necessary. However, holding the gold bonds in a demat form lets investors to transfer their units before maturity.
  • After maturity, the proceeds are automatically transferred to the savings account.
  • Gold bonds can be used as collateral to avail gold loans.
  • There are no recurring management fees.

Limitations of sovereign gold bonds

  • As gold bonds come with an investment tenure, there is no option to renew the investments.
  • Gold bonds are open in tranches as per the scheduled dates issued by RBI. Investors don’t have the flexibility to enter and exit the market at their will.
  • While demat holders can buy and sell units in the secondary market, there may not be effective demand or supply in the market.

Invest in Digital gold through wallets and UPI app

Digital gold is another way to purchase gold online with no paperwork. Digital gold is powered by MMTC-PAMP and you can invest in it through e-wallets, UPI payment apps, brokerage houses, etc.

Features and Benefits of digital gold

  • Customers can buy digital gold in grams or for a specific amount.
  • The gold prices is based on the per gram gold price of 999.9
  • The minimum investment value varies across different platform and it can be anywhere between Rs.1 to Rs.1,000.
  • Investors can purchase digital gold with just Rs.1000. There is no need to invest thousands of rupees at once.
  • You can invest for future gradually over a time span.
  • You can purchase digital gold online 24*7.
  • The gold accumulated can be sold in the prevailing gold rate through the sale window available on the platforms. They will credit the money to your account.
  • The accumulated gold can also be redeemed in the physical form such as gold coins and other minted products. Making charges and delivery charges may apply in this aspect.
  • Paytm, Google Pay, PhonePe, HDFC Securities are some platforms through which investors can invest in digital gold. 
  • Demat account is not required. Customers just need to register with the platform and complete the KYC requirements.

Disadvantages of digital gold

  • The regulatory mechanism is one of the prime concerns of digital gold. As it is not regulated, there is the possibility of the product being misused.
  • Systematic investment plans are not available.

Gold ETF:

Mutual fund houses offer gold ETFs to their customers. Investors can invest in gold ETF online through the mutual fund website or any online investment platform. 

Features and Benefits of Gold ETF

  • Gold bullion is the underlying asset of gold ETF.
  • One unit of gold ETF is equal to one gram of physical gold.
  • It helps investors to accumulate gold. Investors can purchase it in small quantities.
  • The units of gold ETF are traded on the exchanges like a stock.
  • Gold ETFs don’t have any lock-in period. It is liquid investments as investors can buy and sell anytime.
  • The capital gain is calculated according to the tax structure of the non-equity investment classes. So, if you hold the units for more than years, indexation benefits applies along with 20% taxation. 

Disadvantages of gold ETFs

  • Demat account is required to invest in gold ETFs. The cost related to demat account will remain applicable.
  • At redemption, there is no option to avail physical gold. They transfer the proceeds to a savings account.
  • Gold ETFs have an annual expense ratio that includes management expenses and other related costs.

Gold mutual fund:

Gold mutual funds are open-ended mutual funds that investors can invest online to take exposure in gold.

Features and Advantages of gold mutual funds  

  • Investors can invest in mutual funds without a demat account.
  • Gold ETF is the underlying asset class in gold mutual funds.  
  • Systematic investment plan is available for investors who want to invest a specific sum of money regularly.
  • One can start investing with a minimum of Rs.500.
  • Investors can invest and exit any time they want.  

Disadvantages of gold mutual funds

The management cost of gold mutual funds is higher than gold ETF.

Comparison of the different online gold investment options

Sovereign gold bondDigital GoldGold mutual fundGold ETF
Lock-in period8 years, exit after 5 yearsNo lock-in periodNo lock-in periodNo lock-in period
Interest & returnsDepends on gold prices and 2.5% interest per annum paid semi-annuallyMovement in gold pricesMovement in gold pricesMovement in gold prices
Demat accountNot neededNot neededNot neededRequired
Fees & chargesNo management feesCharges as applicableAnnual Expense ratio Annual Expense ratio + demat account charges
Comparison of different ways to invest in gold online

FAQs on Investing Gold Online

Can I invest in gold online?

Sovereign gold bonds, gold ETFs, gold mutual funds and digital gold are some of the non-physical ways to invest in gold online.

Is it safe to buy gold online?

It is safe to buy gold online. Sovereign gold bonds are backed by the government of India while SEBI regulates gold mutual fund and gold ETFs. One can invest in gold online through their net banking portal or logging in to any investment platform that offers these services.

What is the best way to invest in gold?

Investing online is the best way to invest in gold. Online options are backed by 999 purity gold and provide easy liquidity. Investors of sovereign gold bonds receive a discount of Rs.50 for every gold bond bought online.


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