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NEFT/ RTGS details for Mutual Funds

Bank Account mapped to your account does not support Netbanking. Hence we request you to initiate funds transfer through NEFT / RTGS.

Bank Details	ICICI	HDFC
Beneficiary Account Number	3922	MFDICC
Beneficiary Name	Indian Clearing Corporation Ltd MF A/c	Indian Clearing Corporation Ltd -MFD A/c
IFSC Code	ICIC0000104	HDFC0000240
Account Type	Current	Current

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Investing in Physical Gold vs Gold ETFs vs Sovereign Gold Bond

Posted By : reliancesmartmoney.com
Monday Nov 05, 2018

Physical gold vs gold ETFs vs gold SGBs: What should you invest in this Dhanteras

Indians have always had a particular inclination towards gold. It is not only a commodity of prestige and fashion but also a great investment option. Gold is believed to have a good hedge against inflation. Its price tends to rise when the cost of living increases. This means there’s a good chance that your precious metal investments won’t lose its value along the years.
Buying gold is particularly considered auspicious during Diwali. Many people buy gold on the first day of Diwali, which is called Dhanteras. Doing so is believed to bring in good luck and fortune.
However, these days, gold investments are not limited to physical yellow metal. Physical gold alternatives like Gold Exchange Traded Fund (ETF) and Sovereign Gold Bond (SGB) have gained popularity because of their distinctive features.
So, this Dhanteras, if you’re looking to invest money in gold, consider gold ETF and gold SGB, along with physical gold too. Take a look at all three before you choose your gold of choice this festive season.

Physical gold

Physical gold is a tangible asset with a finite value available in different physical forms like biscuits, coins, and jewellery. For an individual, ‘sentimental value’ plays a vital role when it comes to physical gold. In fact, throughout history, gold has emerged as an unparalleled form of wealth creation asset. Buying physical gold has been the most conventional form of investment which could be in the form of jewellery, coins or ingots. It gives you the added benefit of using your investment as a stylish accessory. However, if you’re buying it solely for investment purpose, you need to be cautious as gold jewellery resale value is comparatively lower than gold coins and ingots. Here are a few advantages and disadvantages of buying physical gold.

Advantages of Physical Gold :

Counterparty Risk – When buying physical gold, there is no risk of involvement of any counterparty like banker, broker or any other intermediary.
Inherent Value – Many people invest in gold due to its inherent value, since it has an indestructible physical form, cannot counterfeit easily unlike paper money. Also, its scarcity and universal acceptation backs up its inherent value.
Investment - Buying physical gold has been the most conventional form of investment which could be in the form of jewellery, coins or ingots. Buying gold jewellery gives you the added benefit of using your investment as a stylish accessory. Physical gold investments also give you the benefit of using it as collateral in taking loan. There is no limit of buying physical gold, however you should keep track of your gold transactions for income tax reasons. It is an ideal hedge for financial market risks.
Lock-in Period - There is no lock-in period of physical gold investments. You can keep it as long as you like.

Disadvantages of Physical Gold :

Resale Value - Being a ‘Tangible asset’, gold is indestructible and difficult to counterfeit, but if you’re buying it solely for investment purpose, you need to be cautious as resale value of gold jewellery is comparatively lower than gold coins and ingots.
Safety Issue - You also need to be careful of the safety factor when it comes to physical gold. It is highly susceptible to theft and burglary. You need to keep it safe at home or pay for a safety locker in a bank to keep it secure.
The purity of Gold - When buying gold in physical forms such as jewellery or coins, purity is a major concern since you would need a guarantee that the purchased gold is pure.
Storage Cost - Unlike Gold ETFs and Sovereign Gold Bonds, physical gold needs a secure space to be stored that would cost much giving the worth of the asset.

Gold ETF

Gold Exchange Traded Funds (ETFs) are funds which are traded in stock exchanges and can be bought and sold during trading sessions. Gold ETFs do not have a physical form but are traded almost close to the physical gold price. You can invest in Gold ETFs through Demat account. You can buy and sell it in real-time during trading sessions.

Advantages of Gold ETF :

Investment – Unlike physical gold, here, you can buy as small as one gram of gold or as much as you can afford and gradually accumulate it in your account to multiply your investments. There is no upper subscription limit in buying Gold ETFs.
Safety – Unlike physical gold, the Gold ETFs are kept in Demat account where they will be more secure than in physical form and less exposed to theft. To maintain your Demat account, you need to pay nominal Demat charges for holding scrips.
Tax Benefits - You can buy gold online on reliancesmartmoney.com that offers you multiple gold ETF options. Gold ETF is also eligible for Long-Term Capital Gain (LTCG) at 20%, with indexation, if you hold it for more than three years.
Purity - Purity is not the concern in the case of Gold ETFs since they are held in electronic form and traded near actual gold prices. So, gold ETFs have more transparency than physical gold when it comes to purity.

Disadvantages of Gold ETF :

Brokerage - The broker charges a cost every time you buy or sell gold ETF units from your Demat account.
Unlike physical gold, the gold ETFs cannot use as collateral for taking loans.
High Expense Ratio

You can buy gold online on reliancesmartmoney.com that offers you multiple gold ETF options.

Gold SGB

Sovereign Gold Bond (SGB) is a new type of gold investment introduced by the government. The gold bonds for investments can be purchased at select post offices, designated banks and through stock exchanges. The SGBs are issued by the Reserve Bank of India (RBI) and are traded on exchanges.

Advantages of Sovereign Gold Bond (SGB) :

Investment – Like Gold ETFs, you can start investing in Sovereign gold bonds from 1 gram and go up to 4kg. The maximum limit of subscription for trusts and similar entities per fiscal year is of 20kg. Investors will be issued with the Holding Certificate under Government of India Stocks under Government Security Act, 2006. The issued bonds can also be converted into Demat form.
Taxation – The SGBs comes with a 5 year lock-in period and applicable for long-term capital gain after 3 years. The most lucrative advantage is, if you redeem gold after maturity, then no capital gain tax will be applicable.
Interest - The Sovereign gold bonds are entitled to a fixed 2.5% interest of invested capital per annum.
Purity - Like Gold ETFs, the Sovereign gold bonds are also traded in non-physical form but the prices are linked to the actual price of physical gold.

Disadvantages of Sovereign Gold Bond (SGB) :

Lock-in Period - The lock-in period is a concerning issue with the gold bonds since it comes with a 5-year lock-in period. One can only withdraw from the 5th year. That made it less idle for short or mid-term investments.

Comparison of Physical Gold, Gold ETFs and Sovereign Gold Bond

Parameters	Physical Gold	Gold ETFs	Sovereign Gold Bond
Subscription Limit	No limit	Minimum: 1gram Maximum: No limit	Minimum: 1 gram Maximum: 4kg per person & Hindu undivided family (As per rules for SGB 2018-19) and 20kg for trusts and similar entities
Lock-in period	No	No	5 years
Returns	Lower than actual return*	Lower than actual return*	Higher than the actual return
Liquidity/ Tradability	Low**	High	High
Safety & Security	Low (Due to higher risk of theft and cheating)	High (Due to low risk of theft and cheating)	High (Due to low risk of theft and cheating)
Long-term Capital Gain (LTCG)	LTCG applicable after 3 years	LTCG applicable after 3 years	LTCG applicable after 3 years (No capital gain tax if held till maturity period)
Acceptance as collateral for loan	Yes	No	No
Purity of Gold	Purity check needed	High (As Gold ETFs held in electronic form)	High (As SGB held in electronic form)
Storage Cost	High	Low	Very Low

As you see, it is worth considering gold ETF and SGB as a means of gold investment this festive season. Like physical gold, these investments have the benefit of capital appreciation. Plus, there are more advantages like long-term capital gains and security too.

Physical Gold v Gold ETf v Gold SGB