In the world of investments, few assets have stood the test of time like gold. Its enduring value and reputation as a hedge against inflation have made it a preferred choice for investors seeking wealth preservation and security. But in today’s digital age, gold investment has evolved, offering new opportunities and conveniences through digital gold. In this comprehensive guide, we will take you on a journey through the realm of digital gold investment.
Gold Investment Vs. Inflation
Throughout history, gold has demonstrated its resilience as a safe haven asset during times of economic turmoil. Several notable instances underscore its role as a protector of wealth:
- The Great Depression: Amidst the catastrophic market crash of the 1930s, gold emerged as a refuge for investors seeking stability in uncertain times.
- OPEC Oil Price Shock: The 1970s oil crisis triggered economic disruptions, driving up inflation. Investors turned to gold as a hedge against eroding purchasing power.
- The Asian Crisis: During the late 1990s, as Asian economies faced financial turmoil, gold provided a shelter from market volatility.
- The Real Estate Market Crash 2008: The global financial crisis prompted a flight to safety, propelling gold prices upward as equities plummeted.
- Brexit (2016): The UK’s decision to exit the European Union triggered uncertainty, leading investors to flock to gold for security.
- Coronavirus Pandemic: In the face of the unprecedented COVID-19 pandemic, gold surged as governments implemented fiscal stimuli and central banks resorted to quantitative easing.
Digital Gold Vs. Physical Gold
Digital gold and physical gold represent two distinct avenues for investors to access the timeless allure of this precious metal. Physical gold, with its tangible presence, holds cultural and historical significance and can serve as a store of value. However, it comes with storage costs, security concerns, and limited divisibility. In contrast, digital gold, facilitated by modern technology and online platforms, offers investors accessibility, fractional ownership, transparency, and liquidity, making it a convenient and cost-effective way to invest in gold. The choice between the two depends on individual preferences, investment goals, and the importance of factors like convenience and security in one’s investment strategy.
Here’s a comparison table highlighting key differences between digital gold and physical gold:
|Aspect||Digital Gold||Physical Gold|
|Accessibility||Easily bought and sold online, 24/7 availability.||Requires visiting a dealer or jeweler during business hours.|
|Fractional Ownership||Offers fractional ownership, enabling small investments.||Typically purchased in fixed denominations, making small investments challenging.|
|Storage||No physical storage needed; gold is securely held by the platform.||Requires secure storage, potentially incurring additional costs.|
|Transparency||Real-time tracking and transparent pricing.||Transparency may vary depending on the source and dealer.|
|Liquidity||High liquidity, easy to sell quickly.||May require finding a buyer or dealer for selling.|
|Security||Secure online platforms with safeguards against theft.||Vulnerable to theft, loss, and damage; may require insurance.|
|Transaction Costs||Generally lower transaction costs.||May involve premiums, making costs higher.|
|Taxation||Tax treatment varies by country; long-term capital gains tax may apply.||Taxation varies by jurisdiction; may involve capital gains tax, wealth tax, or GST.|
Types Of Digital Gold Investment
Here’s a consise list of types of digital gold investments:
- Gold ETFs: Exchange-traded funds that represent ownership of physical gold.
- Digital Gold Platforms: Online platforms for buying and holding fractional gold.
- Sovereign Gold Bonds (SGBs): Government-issued bonds denominated in grams of gold.
- Digital Gold Accumulation Plans (DGAPs): Systematic plans for accumulating small amounts of gold over time.
- Gold Mutual Funds: Professionally managed funds investing in gold-related assets.
Read More: Types of Digital Gold Investments
Benefits of Investing in Digital Gold
There are a number of benefits to investing in digital gold, including:
- Convenience: Digital gold is very convenient to invest in. You can buy and sell digital gold at any time, from anywhere, using your smartphone.
- Liquidity: Digital gold is a very liquid asset. You can easily convert digital gold to physical gold, or sell it for cash.
- Affordability: You can invest in digital gold in small denominations, starting from as little as Rs. 1.
- Purity: Digital gold is stored in secure vaults and is insured. So, you can be sure that your gold is pure and safe.
Best Platforms For Digital Gold Investment
Digital gold is a popular investment option in India, and there are a number of different apps that allow you to buy and sell digital gold. Here are some of the best apps to invest in digital gold in India:
- JAR: JAR is a popular app for investing in digital gold and other precious metals. It is easy to use and offers a variety of features, such as live gold rates, gold SIPs, and the ability to convert digital gold to physical gold.
- Gullak: Gullak is another popular app for investing in digital gold. It offers a variety of features, such as live gold rates, gold SIPs, and the ability to gift digital gold to others.
- Fello: Fello is a fintech app that offers a variety of financial services, including digital gold. It offers live gold rates, gold SIPs, and the ability to convert digital gold to physical gold.
- PhonePe: PhonePe is a popular UPI payment app that also offers the ability to invest in digital gold. It offers live gold rates, gold SIPs, and the ability to convert digital gold to physical gold.
- GooglePay: GooglePay is another popular UPI payment app that also offers the ability to invest in digital gold. It offers live gold rates, gold SIPs, and the ability to convert digital gold to physical gold.
Read More: Best Apps To Invest In Digital Gold In India
Legal Aspects Of Gold Investments
The legal aspects of digital gold investing in India are still evolving, but there are a few key things to keep in mind.
- Digital gold is not a security. This means that it is not regulated by the Securities and Exchange Board of India (SEBI). However, the government has taken steps to regulate the digital gold industry, and there are a few key regulations in place.
- Digital gold must be backed by physical gold. This means that the company offering digital gold must have an equivalent amount of physical gold in its possession. This is to ensure that investors can redeem their digital gold for physical gold at any time.
- Digital gold companies must be registered with the government. This is to ensure that the companies are legitimate and that they are following the government’s regulations.
How is Digital Gold Taxed
Digital gold is taxed in India like physical gold. The tax treatment of digital gold depends on the holding period.
- Short-term capital gains (STCG): If you sell your digital gold within 3 years of buying it, the gains will be taxed at your applicable income tax slab.
- Long-term capital gains (LTCG): If you sell your digital gold after 3 years of buying it, the gains will be taxed at 20% with indexation benefits or 10% without indexation benefits
In a rapidly evolving digital landscape where traditional investment avenues are being reshaped, it’s essential to stay ahead of the curve. We’ve explored the dynamic world of digital gold investments and how it can offer financial security and growth potential. Among the plethora of options available, Fello stands out as a trusted and innovative digital gold investment app that not only provides a secure platform for investing in this precious asset but also rewards you for your commitment to saving. With Fello, you’re not just investing; you’re setting the foundation for a more financially secure future. So, why wait? Start your journey towards financial empowerment today, and let Fello be your trusted companion in your digital gold investment journey.