Gold has held a special place in Indian culture and finance. Whether it is for weddings, festivals, or savings, gold is seen as a sign of wealth and security. People trust gold as it holds its value, even when times are tough. Hence, it is considered one of the safest things you can invest in.
Today, the best part is that you do not need to buy gold in the form of coins or jewellery. You can just invest in it digitally through Digital Gold and Gold ETFs.
In this blog, we will explain what digital gold and gold ETFs are, how they work, and more. So, read on and understand which one is better for you.
What is Digital Gold?
Digital gold refers to the gold you buy online through websites and apps. When you invest in digital gold, you are actually buying real 24K gold, which is stored safely by the service provider on your behalf. With this, you do not need to worry about storing physical gold at home.
Once you buy it, you can hold it, sell it, or even convert it into physical gold like coins or jewellery. With CASHe, you can buy 99.99% pure 24K gold for as little as ₹1.
Digital Gold Advantages
Here are some important benefits of investing in digital gold:
- You can invest in digital gold anytime using your phone or laptop.
- You do not have to worry about storage, as the gold is stored safely by the company.
- You can start your investment with as little as ₹1.
- You get 99.9% pure 24K gold.
- You can convert digital gold into jewellery or gold coins.
- It offers instant liquidity, and you can sell your gold anytime and get the money in your account.
What are Gold ETFs?
Gold ETFs (Exchange Traded Funds) are mutual fund-like investment products that track the price of gold. So, they are an easy way to invest in gold without actually buying physical gold. These are investment products that follow the price of real gold and are traded on the stock market just like shares.
When you buy a Gold ETF, you are not getting real gold in your hands. But you are investing in a fund that invests in gold bullion, tracking the price of gold. Hence, to invest, you would need a demat account and a trading account.
Gold ETFs Advantages
Here are some benefits Gold ETFs offer:
- You have transparent pricing as the price of ETFs is directly linked to the market gold prices.
- It is safe as it is managed by SEBI-regulated fund houses.
- You do not pay any making or extra charges, unlike jewellery.
- It offers high liquidity, and you can buy or sell anytime during market hours.
- If you are a long-term investor, then Gold ETFs are ideal for steady growth.
Gold ETFs Disadvantages
- You need to have a demat and a trading account to invest.
- You may need to pay brokerage charges.
- Unlike digital gold, you cannot convert it into jewellery or coins.
Key Differences Between Digital Gold and Gold ETFs
Now, let’s take a look at the major difference between digital gold and gold ETF:
| Feature | Digital Gold | Gold ETF |
|---|---|---|
| Asset Type | Physical gold (stored in secure vaults) | Financial product |
| Minimum Investment | ₹1 | Price of 1 ETF unit (price equivalent to 1 gram of gold) |
| Requires a Demat Account | No | Yes |
| Storage | The seller stores it on your behalf | Not required |
| Physical Gold Conversion | Yes | No |
How to Choose Between Digital Gold and Gold ETFs
Choosing between digital gold and gold ETFs depends entirely on your requirements and goals.
- You can choose digital gold if you want easy access, small investments, and an option to get physical gold.
- You can choose Gold ETFs if you already have a demat account and are looking for long-term investments.
Tax Implications of Digital Gold vs Gold ETFs
Tax-wise, both Digital Gold and Gold ETFs are similar:
- Digital Gold is treated as physical gold, and hence, you need to pay capital gains tax. If sold within 3 years, gains are added to your income and taxed. After 3 years, a long-term capital gains tax of 20% is applied.
- Gold ETFs are treated as non-equity mutual funds. You are taxed as per the income slab if sold within 3 years, and 20% after 3 years.
Who Should Invest in Digital Gold?
You should invest in digital gold if:
- You are new to gold investments and want to invest small amounts.
- You do not have a demat account.
- You want the option to convert gold into jewellery or coins.
Who Should Invest in a Gold ETF?
You can invest in Gold ETFs if you are:
- An experienced investor with a demat and trading account.
- Looking for portfolio diversification.
- An investor with long-term goals.
Digital Gold vs Gold ETF – Which is Better?
As mentioned earlier, if you are a new investor, want to start small, and wish to convert gold into jewellery later, digital gold is better for you. But if you are looking for a cost-effective, regulated, and market-linked investment, then Gold ETFs can be a better choice for you.
But make sure your decision is based on your goals and requirements.
Meanwhile, if you are looking for instant funds to invest in gold, you can avail an instant personal loan of up to ₹3 lakh with CASHe. Download the CASHe app, apply online and get your loan approved within minutes.
