We can safely say that gold holds a sacred place in Indian households. We don’t see it as just another metal. Instead, it signifies prosperity and long-term financial security. One thing that gets passed on over generations and is also considered the most valuable gift at weddings and other auspicious occasions.
As money and its value have evolved, so has the definition of gold. It is normal to find digital versions of all forms of currency and assets in today’s time. It is no surprise that gold has also turned digital. The digital gold has emerged as a popular and promising option for investment.
Here’s a comprehensive guide for you to know more about how you can make your digital gold investment.
What Is Digital Gold?
Digital gold is your avenue for investing in gold without getting into the hassles of handling it physically. It is a much simpler and cost-effective method of putting your hard-earned money into gold. When you purchase digital gold from a trusted partner, the company buys it on your behalf and stores it under your name in a safe vault. It is a facility that allows you to invest in gold from the comfort of your home.
Traditionally, Indians have considered gold as a valuable asset and as something that can salvage a rainy day. Digital gold is similar to physical gold in most ways. The difference is that you can buy, sell, and transact it using technology.
Moreover, it is better than buying jewellery as the making charges tend to reduce the value of gold that you buy from jewellers. Due to these reasons, digital gold investments are gradually beginning to emerge as the most popular investment methods for new-age Indian investors.
Digital Gold Investment: How It Works?
Now that you have understood the concept of digital gold let us see how it works.
Firstly, there is no restriction on the minimum amount of digital gold that you can buy. You can start by investing as low as INR 100. Every single gram of digital gold that you purchase has the purity of 24 Karat gold. When you buy digital gold, you make a real, solid investment that you can sell anytime at an ongoing rate.
In India, digital gold is provided by three companies:
MMTC-PAMP India: It is a collaboration between the state-owned MMTC (Metals and Minerals Trading Corporation of India) and the Swiss firm PAMP (Produits Artistiques Métaux Précieux).
Digital Gold India Pvt Ltd : It is an India-based private company that offers digital gold through its renowned brand, SafeGold.
Augmont Gold: It is an accredited, India-based company.
However, these companies do not provide digital gold directly to consumers. Instead, they tie up with different websites and platforms to bring the facility to the investors. You can also find a digital gold app that is all the more convenient and allows you to transact in it with just a few taps on your smartphone.
How to Buy Digital Gold?
Now that we are familiar with the concept of digital gold let us look at the simple process that allows you to buy, sell and transact in it easily and efficiently. Although every platform, app, or website that offers digital gold investments may be different, a few main steps remain constant.
Here is how you can buy digital gold:
- Step 1: Find an investment app or platform that best suits your requirements and offers various benefits. It is advisable to read online reviews or consult your social circle to make an informed decision.
- Step 2: Enter the amount of digital gold you wish to purchase. You can key in this amount either in terms of weight (grams of digital gold) or money (INR). The prevalent market rates for digital gold prices today in India will determine the amount and price of digital gold.
- Step 3: Your platform of choice will likely require you to fill out and complete a KYC process.
- Step 4: From here on, you will be directed to different payment options to purchase your desired amount of digital gold. After you make the payment, your digital gold will be kept in a secure vault and accessed by you anytime, from anywhere.
- Step 5: Once you have an investment in digital gold, you can choose to sell it as and when you see fit.
- Step 6: If you wish to hold the digital gold for a long time, you can do it simply by requesting doorstep delivery. This delivery can be made in the form of bullions or coins at an additional delivery fee.
Benefits of Digital Gold
Keeping all this in mind, we can surmise that an investment in digital gold investment provides many advantages. Here are a few such digital gold benefits:
- No Restrictions: You can put any amount of your savings to invest in digital gold. It doesn’t matter if you are in the early stages of your career and do not have enough savings to make a considerable investment.
- Purity Guaranteed: Digital gold investments are one of the best ways of ensuring that the metal you are investing in is of the highest and purest quality. All digital gold investments are made in 24 Karat gold.
- Physical Gold as an Option: You can also, at any point, choose to convert your digital gold investment into physical gold and receive it right at your doorstep.
- Security: One of the greatest hassles posed by investing in physical gold is trying to ensure that it is kept in a safe location. With digital gold investments, your gold is kept secured in a vault by professionals, ready for you to access at any time.
- Use digital gold as collateral: One of the greatest digital gold benefits is that it serves as an ideal form of security that you can use for availing online loans. It counts as an asset and can be pledged as collateral for credit.
- Diversification: If you are looking to balance the risk factor in your overall investment portfolio, digital gold provides the perfect investment mode for you to diversify.
Things to Note Before Buying Digital Gold
As mentioned above, digital gold investment comes with various benefits that are unique to it. However, before you make an investment in digital gold, it is also prudent to be informed about a few important things about digital gold investments:
- As of now, investments in digital gold are unregulated. It makes investing in digital gold more risk-prone than investing in assets like stocks, which SEBI monitors. However, you can soon expect a similar body to regulate the space of digital gold.
- While there are few limitations placed when investing in digital gold, there is, however, no buying cap on it. Your KYC’s main requirement should be successful if you wish to buy more than 50gms of gold.
- The taxes applicable to digital gold are the same as that of buying physical gold. When you purchase digital gold, you will be required to pay 3% in goods and services tax, or GST.
- Most platforms have a limit of INR 2 Laks for investment in digital gold. If you wish to invest more in gold, you will have to go to a dealer or jeweller.
- A few companies offer to store the gold for you only for a limited period. After this time, you will be required to either sell it or opt for its physical delivery.
- Some companies may levy extra charges such as making fee or delivery fee that you may not find reasonable. It is advisable to make an informed decision to avoid any surprises later.
- If digital gold does not fit into your investment philosophy due to any reason, you can explore the option of sovereign gold bonds of gold ETFs. These instruments will help you to invest in gold for a longer duration.
Digital gold provides an efficient, cost-effective, and convenient method of investing in an asset that investors around India have coveted and desired for a long time. The best part is that it does away with the anxieties associated with storing and securing physical gold in a safe space. Instead, it provides professional services to do the same.
Moreover, with a number of platforms that offer digital gold investment as an option, it is now easier than ever to buy, sell or make any form of transaction in gold. While there are still a few points that should be considered before making a digital gold investment, the various benefits it offers is quickly making it a popular investment.