Gold Investment | Digital gold vs physical gold: Gold investment guide for millennials

Gold Investment | Digital gold vs physical gold: Gold investment guide for millennials Kuka USA


Digital gold vs physical gold: Gold investment guide for millennials&nbsp

Like earlier generations, millennials have also grasped the significance of investing in gold, especially during periods of uncertainty like the ongoing global pandemic. Unlike others, however, as digital natives, millennials are more receptive to digital transactions.

Digital gold is a new-age product that helps investors own a traditional asset-backed by the benefits of tech tools. This includes not worrying about verifying the purity of physical gold and then seeking secure storage space as one starts to accumulate the precious yellow metal.

Benefits of Yellow Metal Investments:

In the post-pandemic phase, millennials have suspended discretionary spending while prioritising secure investment options. It’s common knowledge that gold is a safe haven even during times of volatility. Both physical and digital gold provide people with an opportunity to hedge against uncertain market conditions.

Historically, gold is a consistent and steady performer over the long run. The average 10-year annual stock market return is 9.2%, according to Goldman Sachs data on the US stock markets (2010-2020). While in India, the BSE Sensex appreciated by 130% between 2010 and 2019. Gold doesn’t lose its sheen when compared to either market, delivering 134% returns to investors in the same decade.

Naturally, the yellow metal is perceived as a safe hedge against inflation at all times. As a result, there is no right or wrong time to purchase gold, which can be done at any time. It’s no surprise then that gold comprises an integral part of every professional investor’s financial portfolio.

Typically, veteran investors such as Mark Mobius recommend that at least 10% of one’s total investment portfolio should be in gold. With nations worldwide resorting to unprecedented stimulus packages to counter the pandemic’s impact, this is likely to see currencies devalued in the near future. Besides hedging one’s portfolio from the impact of such devaluations, it is especially helpful in offsetting steep corrections in the stock markets.

Nonetheless, today investors wonder – what is a preferable option, digital or physical gold? While all are aware of physical gold such as jewellery, bars and coins, digital gold requires some elaboration.

Decoding Digital Gold

A highly secure online investment instrument, digital gold allows investors to purchase certified 24-Karat pure gold in a hassle-free manner. Every time digital gold is bought online, the seller stores an equivalent amount of physical gold in a secure vault. Investors can start making small investments, as low as Re1 and accumulate gold in their portfolio, across many transactions.

Many popular payment wallets such as PayTM, GPay and PhonePe let you digitally buy and store gold from several providers within your existing payment application. The apps come with a secure Gold Locker where you can store all the gold you purchase through the app. You can digitally sell the gold you have in your Gold Locker back to the provider.

There are other benefits of buying digital gold. To begin with, unlike jewellery, there are no making charges on buy/sell transactions. Investors are also free to liquidate their investments 24×7 at real-time rates with a single click. Apart from being stored safely in secure vaults, the gold kept in custody is fully insured and also backed by an independent trustee.

Customers can invest in digital gold with multiple providers. When digital gold is purchased from MMTC-PAMP, one of the leading providers of digital gold and India’s largest and only London Bullion Market Association accredited gold refinery, investors will be buying 24k 999.9 purest physical gold. The fully secured and insured gold is then stored in certified vaults with MMTC-PAMP. This gold value is then captured in the investor’s preferred app/intermediary’s online platform.

Investors also have the option of retaining their purchase within the secure digital vault or redeeming from a wide range of 24k 999.9 pure gold bars or coins. In case the physical option is chosen, this is then delivered directly to the investor’s doorstep.

Multiple Advantages


The main advantage of buying digital gold is the flexibility, affordability and security it offers investors, among other factors. To begin with, investments can be made in small amounts periodically. This can help build a strong asset portfolio and help secure their financial future. It is relatively affordable and the pricing of digital gold is linked to international market rates without being influenced by factors such as location. Stored in a secure vault, the investment also remains safe from robbery and other external eventualities or threats.
Liquidity is also high as it is available 24×7, unlike physical gold, which can only be sold during working hours of jewellers or institutional gold dealers. Instant redemption is possible as digital gold can be sold online at any time. Generally, the minimum investment required is Re1 while there is no cap on the maximum holding.
When it comes to both categories of gold, digital or physical, the maximum buying limit is Rs 2 lakh per day without a PAN card. This limit applies to a single transaction or multiple cumulative transactions in a day. Likewise, the sale of both categories attracts 3% taxes in the form of GST.
Yet another benefit of digital gold investments is that there is no lock-in period. Therefore, investors can liquidate their holdings on the next day itself. Nonetheless, this is not recommended as gold is best treated as a long-term investment for building a robust financial portfolio.

Given its appeal as a safer, more reliable investment avenue, digital gold is increasingly being preferred by millennials and other digitally savvy retail investors. Overall, digital gold wins on almost every parameter as the ideal way to start building a robust yellow metal portfolio.

Disclaimer: Anika Agarwal is a guest contributor. Views expressed are personal. This article is for informational purposes only and should not be construed as investment, financial, or other advice


Source link

Share:

More Posts