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Investment Guide: Digital Gold Investment in 2022

“Is this the right time to say, welcome to the future?”

We are living in a world where everything is digitalized or is on the way to being digitalized. Post-Pandemic, we are witnessing numerous announcements where a company has transitioned fully into a digitalized platform. This also means we are moving towards a digital world believe it or not. Similarly, we can say that investors like you and I are looking for digital investment options such as digital gold investment, cryptocurrencies, and so on to widen our investment portfolio.

Digital investment has its own merits and demerit but surely is more secure than the other available options.

Gold is one of the oldest and more reliable forms of investment. Acknowledging the current pace of digitalization, the option of digital gold investment allows the investor to own digitized gold, which renders similar value to physical gold.

What Is Digital Gold Investment?

Digital gold is the virtual form of gold. You can buy and sell the gold without having the physical form of gold. It is a more convenient and easier form to acquire gold as compared to physical gold. For the physical form of gold, the investor has to worry about factors such as purity, storage, and inconvenience of buying the physical gold.

It is considered one of the smartest and most efficient ways for investors. You can own digital gold through digital tokens, fractional gold, or digital ownership of physical gold.

By owning digital gold, you will have the flexibility to determine how, when, and where to sell or buy the assets.

Previously, physical gold didn’t have such flexible options to trade. Only recently has it been discovered as a true ROI. To give you a brief idea about how good it is to invest in gold, in 2020, gold had a 24.6% investment return rate.

So, what are the ways you can invest in digital gold?

Investing in gold is surely a good option but digital gold investment will overcome the drawbacks of physical gold investment.

  1. Sovereign Gold Bonds (SGBs)

The Reserve bank of India issues Sovereign gold bonds on the behalf of the government. In 2015, SGBs were introduced under the Gold Monetization Scheme. RBI issues these bonds throughout the year in many tranches. As an investor, you have the option to invest in gold digitally as each bond represents 1 gram of gold. These bonds have an interest rate of 2.5% per annum. You can trust these bonds as it backed by the government. Also, it gives you the freedom to trade with stock exchanges, providing you with that giving a liquidity option. There are many benefits of investing in SGBs such as easy availability of loans, you can gift or transfer these bonds, you will get a good interest rate on them, others.

  1. Gold ETFs

If you are concerned about the purity of the gold, Gold ETFs are the perfect option for you. You will get assured 99.5% purity of gold. If you are someone who has just started to investment or you are a student, Gold ETFs will help you to invest. You can invest small capital and be assured about the security of the investment. Furthermore, it allows you to take loans from financial institutes easily.

ETFs Exchange-traded funds are quite similar to mutual funds. As an investor, you can buy or sell ETFs on a stock exchange like that a regular stock. Also, if you want to invest in gold in small quantities, ETFs are the right option.

  1. Multi Commodity Exchange (MCX)

You can use MCX to trade in gold. The platform offers to trade your gold with various commodities such as gold, silver, copper, etc. As a trader, you can use the platform to trade various quantitative options such as 1 gram, 8 grams, 100 grams, and 1 kg units.

  1. Digital Gold Wallets

Digital Gold Wallets are one of the most convenient ways of digital gold investment. Companies like GPay, PhonePe, Paytm, and other others provide the facility of investing in gold. You can download the app and start investing at as low as 1 rupee. As an investor, you don’t have to be worried about the purity of the gold as it is predefined. You can sell or buy the gold at any time and from anywhere. Also, the companies store the gold in lockers of MMTC-PAMP.

Pros and Cons of Digital Gold Investment

Every investment has its pros and cons which impact the investors. Also, it depends upon the vision of the investor and why he wants to invest. Few investors have short-term goals and few have long terms and depending upon their needs, they have to smartly choose the best option available to them.

Pros of Digital Gold Investment

  • Saving your time and efforts: Once you purchase the digital gold, you can ask the provider to deliver the physical form of gold to your location. This gives you the convenience of converting your digital gold into physical and delivered at your home saving your time and efforts.
  • Small investment: If you are looking to invest small. Digital gold is the best option, you can start your investment from as low as INR 1. This will help you develop a good habit of investing. If you are like me and want to start investing early, digital gold investment is the way forward.
  • Collateral for online loans: As said earlier, digital gold will help you in getting loans. You can use digital gold and apply for loans. Also, digital gold is more secure and genuine, and getting loans is much easier.
  • Storage: The storage is provided by the company that is providing the digital gold. And they are fully responsible for the storage and security of the gold. This makes the investors’ life easy. You don’t have to be worried about the storage of the gold as you do while purchasing physical gold.
  • Purity and Genuity: While purchasing physical gold, you always have to be worried about the purity and Genuity of the gold. While there are signs where you can check the standards but there is no guarantee that the providers can’t cheat or provide you with the fake one. On the other hand, digital gold gives you that surety that the gold is 24k genuine and pure.
  • Exchange: Physical gold gives you some sort of restriction, but digital gold will give you that freedom. As an investor, you can exchange digital gold with physical jewelry, gold coins, and billions.

Cons of Digital gold investment

  • Limit: There is a limit for all the digital gold providing platforms which is Rs 200000. If you are someone who wants to invest more than the limited amount, you have to look for other options.
  • Lack of Official Regulations: As of now there are not many regulations on digital gold which create a sort of uncertainty. For example, the stock market is regulated by SEBI and banks have a regulatory body-RBI. Similarly, digital gold should be authorized by a regulatory body.
  • Additional charges: As they say nothing comes for free. Depending upon your provider or the company, there might be some delivery and making charges that you have to pay.
  • Limit storage period; At times, companies may offer you a limited storage period which can hamper your investment options or plan of investment.

Final Verdict: Whether you should opt for digital gold investment or not?

The answer depends on many factors, however, we will surely suggest you read all the terms and conditions before investing your hard-earned money. Also, digital gold investment will help you if want to start an early investment and you are looking to invest a small amount. And, as you read earlier, there are numerous advantages to digital gold investment.

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