Best Way to Invest in Gold

4 min read | Updated on September 01, 2025, 15:27 IST

About Upstox

Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.

Gold futures, silver prices, gold silver price today

Gold has been one of the most valuable investments in human history. Long before the concept of stock exchanges and the use of money was known, gold had been the primary means of exchange and a store of value for people. This is why terms like ‘gold standard’ are given to the best-in-class things. In India, there is a cultural significance to having gold, as it is considered an auspicious metal and is often a must-have at weddings.

Ever since the price of gold breached the ₹100,000 barrier, it has reaffirmed itself as one of the more reliable assets and a must-have part of your portfolio. Even the young investors are in awe after accepting gold’s ability to hold value and appreciate consistently over the years, making it an excellent investment option.

When it comes to gold investments, people often ask which is the best way to invest in gold. It could be done in the form of jewellery, bullion, and bonds/ETFs. Each way has its own set of pros and cons. Let's explore the best way to invest in gold based on your investment needs.

Why Invest in Gold?

As described earlier, the value of the yellow metal has consistently appreciated. It is not only a safe investment but also provides moderate to high returns in the long term. Here are the most important reasons why you must invest in gold:

Inflation Hedge

Maintains purchasing power during rising prices.

Portfolio Diversification

Low correlation with equity markets.

Safe Haven

Performs well during economic or geopolitical crises.

High Liquidity

Easily convertible to cash anytime, anywhere.

Preservation of Wealth

Trusted store of value across generations.

Stable Returns

Less volatile than stocks or mutual funds.

No Credit Risk

Gold isn’t tied to any issuer’s default.

Universal Demand

Globally recognised and valued asset.

Traditional Vs. Modern Gold Investments

Indians have historically invested in gold in various forms, including jewellery, ornaments, utensils, coins, and bars. These hold sentimental, cultural, and religious value. However, such investments often raise concerns such as purity, storage, and making charges.

In the modern era, people have shifted their investment to paper and digital gold options that offer transparency, safety, and convenience. Products like ETFs, SGBs, and digital gold eliminate the need for physical handling, making gold investments more aligned with today’s digital-first financial preferences.

Best Ways to Invest in Gold

With the evolving investment landscape in the country, there are numerous ways for an investor in India to invest in gold. Here are some of the most popular ways:

Gold Investment Options: Comparison

Option	Features	Pros	Cons
Physical Gold	Jewellery, coins, bars; widely used traditionally	Tangibility, culturally and religiously significant	Making charges, storage issues, and purity challenges
Gold ETFs	Traded on stock exchanges; backed by physical gold	Transparent, liquid, no storage hassle	No cultural significance, and you need a Demat account
Sovereign Gold Bonds	Govt-issued bonds with 2.5% annual interest + price appreciation	Tax-free on maturity, safe, and earns interest	8-year lock-in, early exit after 5 years
Digital Gold	Buy/sell online in small units; backed by real gold	Flexible, accessible via apps, no storage risk	Holding charges after a certain period
Gold Mutual Funds	Invest in gold ETFs; no need for Demat account	Easy to start, SIP option, professionally managed	Expense ratio, indirect ownership

There are a few jewellers that offer deposit schemes, but the ROI for such investments is quite low, and there is a commitment to purchase jewellery from the given jeweller only.

Factors to Consider Before Investing in Gold

Investing in gold is an excellent idea and could be a crucial step in portfolio diversification, as it offers low-to-moderate risk with moderate returns. However, you should consider the following factors before making up your mind:

Investment Goal

Wealth creation, safety, or jewellery purchase?

Liquidity

Do you need quick access to funds, or is a long-term lock-in acceptable

Risk Appetite

Choose secure (SGBs) or flexible (digital gold) options accordingly.

Tax Implications

Check capital gains tax and SGB exemptions.

Regulatory Oversight

Prefer options backed by the RBI/SEBI.

Cost Involved

Making charges, storage fees, or fund expenses.

Summing up

Gold remains a timeless and versatile investment. With evolving options like SGBs, ETFs, and digital gold, investors can now choose formats that balance safety, returns, and convenience. Align your choice with your financial goals to make a gold investment truly rewarding.

FAQs

What is the safest way to invest in gold?

The safest way to invest in gold is through Sovereign Gold Bonds (SGBs), which are issued by the Government of India and offer fixed interest along with price appreciation.

Is it better to buy physical gold or digital gold?

Digital gold is more convenient and secure for investment purposes, while physical gold is better suited for personal use or jewellery.

How much gold should be in your investment portfolio?

Experts recommend allocating 5–10% of your portfolio to gold for effective diversification and protection against inflation.

Are gold ETFs better than gold mutual funds?

Gold ETFs offer lower costs and better liquidity, but gold mutual funds are more suitable for investors without Demat accounts.

Do Sovereign Gold Bonds offer better returns than other gold investments?

Yes, SGBs can offer better returns due to their fixed annual interest and tax-free redemption if held till maturity.

About Author

Upstox Desk

Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.