Gold is one of the most popular commodities in India. In fact, Indians love it so much that India is the largest consumer and importer of gold in the world. Gold can be collected in any form – gold jewelry, gold coins, gold bars, gold bullions, etc. However, not much individuals are aware that thanks to the advanced technology they can now invest in gold digitally as well. Yes, you heard us right. Gold mutual funds and gold ETFs (exchange-traded funds) allow investors to buy gold digitally. Are you wondering if you can invest in gold via SIP route as well? The answer is yes. Let’s understand a few things that you must know as an investor planning to invest in gold via SIP.

Reasons to invest in gold

If you are speculating whether or not you should invest in gold funds or ETFs, here’s are a few reasons in the favor of gold investments and why you must shift from traditional gold investments to digital gold investment:

  1. Security –Unlike traditional gold investments, gold mutual funds or gold ETFs are digitally stored in an individual’s DEMAT account. This protects an individual from unwanted theft or loss of investment.
  2. High liquidity – Gold ETFs or gold funds are more liquid than traditional forms of gold in the form of coins, jewelery, bars etc. as one can easily sell the gold units in the stock markets at any time they wish to unlike traditional gold investments.
  3. Collateral – If you are looking for collateral against bank loans, then gold ETFs or gold mutual funds can be your go to investment option.
  4. Hedge against inflation –Since the gold prices do not fluctuate too sharpy in the bigger picture, gold funds or gold ETFs act as good investment option if you are looking to hedge your investment portfolio against negative connotations of inflation.
  5. Helps to avoid unnecessary expenses – Holding physical gold requires certain, unnecessary expenses such as the charges paid against locker charges in bank to secure the gold. Gold ETFs or gold funds negate this expense of holding gold as digital gold is held electronically in DEMAT account. This helps an investor to reduce their expenses of storing gold.

How to invest in gold via SIP?

The SIP mode of investment allows investors to invest a predetermined sum of money in certain types of investment such as gold funds for a given period. So, according to your convenience and budget, you can decide an investment amount. What’s more, investing in gold through SIP route of investment will enable an investor to purchase gold and build wealth gradually and systematically. Hopefully, this article has convinced you to shift from traditional investments in gold to digital form of gold. Remember that if you decide to go forth and invest in gold funds or gold ETFs through SIP, then you must instruct your bank about the same. Happy investing!

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