As women, we have been programmed to believe that money somehow isn’t our concern, it’s a man’s job to take care of the finances. ‘Don’t talk about money’ is one of the most deep-seated unspoken rules of ‘lady-like etiquette.’
Yet, according to LXME’s Women and Money Power Report 2022, 49% of women were investing in gold and the metal held its position across all age groups. This is because gold as an asset class is what women are most comfortable with and it has become the “Proxy cash”, “Emergency Fund” as well as for “Retirement”.
Women today are working towards their financial health, and are using gold as a long-established safety net, but not always in the smartest or informed way.
Gold jewellery demand in India in the third quarter (July-September) of 2022 went up by 17% at 146.2 tonne as compared to 125.1 tonne registered in the year-ago period.
Investing in physical gold is a long-standing practice in Indian culture, whether that is through family traditions or auspicious festivals. However, it is now a well-known fact that despite its multiple benefits, purchasing gold jewellery and physical gold comes with a huge markup. With a 3% GST paid upon purchase, added charges on making, designing and storage of gold tend to erode its value.
Yet our country remains the largest consumer of gold globally with over 11% of the world’s total gold owned by Indian households. Considered one of the most valuable assets, gold has long been a safety net that one must incorporate into their portfolio.
It’s time to go Digital!
Every smart investor today has come to realize the benefits of investing in gold digitally. It’s hassle-free, fairly valued, and a pure form of investment. There are various ways of investing in digital gold like sovereign gold bonds, gold mutual funds, gold ETFs, and digital gold plans, to name a few. One is indeed spoilt for choice and could have a hard time making the right decision. Here’s your go-to guide to investing in gold the smart way!
Sovereign Gold Bonds: As one of the most lucrative ways of investing in gold, sovereign gold bonds are a great option for investors looking at making a lump sum, long-term investment (Lock in-5 years; Maturity period 8 years) in gold with an added interest income of 2.5% per annum. These are issued by the RBI on behalf of the Government of India. It is like buying real gold but in certificate format. It’s a cost-effective way to add gold to your portfolio and a few of the benefits are that it comes with no GST, no making charges, no risk of theft, and no insurance cost.
Gold ETFs: Like any other stock of a firm, gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE). Gold ETFs invest in 99.5% pure gold. These are the best investments for anyone searching for both short- and long-term investment/trade alternatives or for investments with simple liquidity. With no entry or exit load fees, investors may readily sell their ETF units on the stock market.
Gold Mutual Funds: Mutual funds that invest in gold, either directly or indirectly, are known as gold mutual funds. Gold mutual funds invest in the shares of gold mining and distribution companies, physical gold, and gold ETFs. With as little as Rs.100, investors can get started. These are appropriate for investors who wish to make modest gold investments or who are searching for a liquid means to do so. By establishing a SIP, investors may also make recurring contributions in gold mutual funds. What's great for investors is that they benefit from a professional fund manager who takes the decisions to generate returns.
Digital Gold Plans: A practical and economical approach to accumulating gold, digital gold plans enable you to buy, sell and accumulate pure gold in fractions anytime and anywhere. You can invest in digital gold with as little as ₹1! It is perfect for individuals who desire both the advantages of investing in gold and the convenience of taking physical delivery at a later date. Investors are able to make tiny investments, but they must carefully choose the platform because digital gold does not come under the purview of any financial regulator.
The tax implications mostly remain the same across instruments. If gold is held for less than 36 months, the tax is as per slab rates. Whereas, if gold is held for more than 36 months, a flat 20% tax rate is charged with indexation benefits along with a surcharge(if applicable) and a cess of 4%.
Only in the case of SGBs, the above-mentioned sustain if the instrument is sold after 5 years but before 8 years. Otherwise, the interest income is completely taxed while the corpus received upon maturity is tax exempted.
With the plethora of options available, as times are changing, women are championing their financial decisions with an increased level of financial literacy. Women continue to have a strong emotional and secure relationship with gold and are successfully moving towards investing in Gold the smart way!
Priti Rathi Gupta is the Founder & MD of LXME – India’s First Neobank for Women in the making