Paper Gold: How to Buy and Invest?

Storing a paper gold is much easier as it is digital and can be stored in demat. However, physical gold requires safe storage and security costs.

Investors can purchase paper gold online in lower denominations, making it affordable for retail investors.

Investment in paper gold, like ETFs and digital gold can be freely bought and sold in the stock exchange offering smooth liquidity.

Small budget investors with limited capital can invest in paper gold in fractions. It is not possible when buying physical gold.

The paper gold such as SGBs, Gold ETFs etc are backed by government institutions and regulatory bodies. So, purity of gold is assured.

As the name suggests, Gold ETFs are exchange traded funds which can be bought and sold from your demat account itself. The process of buying Gold ETFs is similar to buying shares, completely online.

Sovereign Gold Bonds or SGBs are government securities issued by RBI. SGBs can also be from online from your demat account. The process slightly differs from buying shares as SGBs are not always available.

Digital gold investment can be done by using any fintech apps. These days many fintech apps provide the platform to buy digital gold. It is important to note that buying digital from fintech apps is not regulated yet.

The funds actually invest in Gold ETFs. Investors who do not have a demat account can invest in gold mutual funds online. The value of the gold mutual funds is linked with Gold ETFs.

The value of paper gold is directly affected by fluctuations in gold prices and macro-economic factors.

Profits earned from investing in paper gold are subject to capital gains tax. LTCG from SGBs are exempted but ETFs are taxed.

SGBs are good for long-term investors, whereas ETFs and digital gold can be used by those looking to invest for short-term.

A mix of physical and paper gold investing can provide a balance approached, ensuring stability in the overall portfolio.