With Diwali just around the corner, you'll notice newspapers brimming with jewellery advertisements and enticing offers aimed at captivating customers. In India, purchasing gold or gold ornaments holds great significance during Diwali. However, if we observe the trend among younger women today, it's apparent that they aren't wearing jewellery as regularly as before. Nevertheless, come Diwali, the tradition of investing in gold ornaments, whether they are worn or stored safely in a bank locker for the rest of the year, remains strong.

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I, too, found myself caught up in this cycle of acquiring gold, only to realize that I wasn't using it as much as I thought. In fact, my wedding jewellery lies as an emotional investment in my bank locker, rarely seeing the light of day. This realization led me to question the wisdom of this practice. Instead of adding to my collection of jewellery that remained locked away, I decided to change my approach. I ceased buying jewellery and, on Dhanteras, started an SIP (Systematic Investment Plan) in Gold or equity Mutual funds.

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Buying jewellery is a cherished tradition, especially when it holds personal and emotional value. However, it's crucial to consider whether we are genuinely utilizing our investments or if they are merely accumulating in our lockers. Storing these valuable items safely can be a hassle, and the retailer’s markups in the form of making and wastage charges reduces its resale value.

Alternatively, there are more practical and profitable ways to invest in gold. With the changing demographics, and the advent of technology, digital gold has gained prominence in recent years in the form of Gold ETF’s, Gold mutual funds and SGBs.

 

The Gold ETFs are backed by physical gold. They provide the flexibility and liquidity to enter and exit at any point of time. Gold ETF units are listed and traded on the stock exchanges at the prevailing market price of gold. You need a demat account to invest in gold ETFs.

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Gold Fund of funds are open ended funds based on the units provided by the Gold ETF. You don’t need a Demat account to invest in these funds. You can start a SIP in gold funds and diversify your portfolio risk.

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SGB is backed by sovereign guarantee and offers market linked returns on gold. SGBs offer 2.5% annual interest and capital gains are tax-free if the bonds are held till maturity. They have an eight-year tenure with an exit option from 5th year onwards. SGB’s are less liquid as compare to Gold ETFs.

 

This Diwali, make an informed choice that resonates with your values and financial aspirations.