Do Festive Gold Purchases hold any Investment Value, or are they just High-Value Purchases?

Over the years, with new investment options like ETFs, cryptocurrency, small cases, etc., coming into the picture, many modern-day investors have begun to question - are festive gold purchases worth it?

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The answer can be easily found in the throngs of people lining up in front of jewellers’ shops to buy gold during Diwali, Akshay Tritiya, and the wedding season.

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Especially in India, gold is not only considered auspicious, and a good form of investment; this shining yellow metal has been entwined with people’s emotions for centuries. The amount of gold one possesses is indicative of their social stature.

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However, the question is, what happens to the gold we have seen our parents obsess over buying during festivals like Diwali or Akshaya Tritiya?

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Do they have exceptional value? Or does it, like any other high-end investment, depreciate with time?

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In this article, we will demystify that for you and also find a suitable alternative.

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Physical Gold vs. Digital Gold

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The traditional way of investing in gold is to buy physical gold. But there is a new way of investing in gold that is just as good and safe - digital gold. Let’s evaluate each to understand its worth.

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Is Going Digital a Smarter Investment? Check detailed comparison of Physical Gold and Digital Gold.

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Evaluating Physical Gold

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Pros

• Investors can take a loan by pledging gold ornaments.
• Gold, unlike other assets, does not depreciate over time.
• Gold is inflation-proof. Hence, if you buy physical gold at today’s value, you can recuperate it while selling it in the future.

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Cons

• In India, over 800-900 tonnes of gold are imported annually. Incidentally, it is almost the entirety of the demand. Hence, the amount we pay as gold prices is determined by the exchange rate of the rupee. To make matter worse, since the value of the Indian rupee is depreciating, we end up paying a significantly higher rate than the real purchase amount.
• The purchase of gold is commonly kept under wraps because of the safety risk. Hence, the carrying and storing of gold are high.
• The minimum investment in physical gold is substantial. Therefore, it is inaccessible to a large portion of people. Gold biscuits, for example, are available in quantities of 10 grams.
• Capital gain from investing in physical gold is taxable according to the holding period. For instance, if the gold is sold after 36 months, then 20% tax with indexation benefit and an additional 4% cess and surcharge is levied.
• The buyer must pay wealth tax if a gold ornament is bought worth over 30 Lakhs.

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Digital Gold: What makes it so Convenient

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One of the most popular alternatives to physical gold is digital gold. Many investors nowadays consider it one of the most cost-effective and efficient ways of gold investment.

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Pros

• Pure & Cost-effective: Digital gold gives true freedom to choose the investment amount. Since there is no minimum investment amount, you invest as low as ₹10 and get 99.99% pure 24-carat gold.
• Redemption: Digital gold is easy to redeem, unlike physical gold coins or bars. The units are simple to buy and sell. Furthermore, one can quickly cash out their investment.
• Loans secured by digital gold: The investment can be used as collateral for loans.
• Robbery-proof: The digital gold assets are insured and safely stored in a vault, which makes them robbery-proof. The vendor need not take responsibility for the safety of the gold.
• Track investments: Online systems allow investors to quickly track their assets (apps or websites). Furthermore, they can quickly analyze their investment performance and obtain new insights.
• Portfolio diversification: It is an excellent investment portfolio diversifier and a useful asset for hedging.
• Real-time gold rates: Digital platforms provide real-time gold rates. As a result, the investor might capitalize on price movements and make profits.

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Cons

• The trading platforms charge a management fee of 2% to 3% and storage and insurance charges.
• The lack of regulatory authority for digital gold platforms often makes it a risky investment.

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How is Jar App making Investments in Digital Gold convenient?

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Jar app is a micro-savings platform that scans your SMS folder to detect your online purchases’ payments.

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It then rounds-off the amount nearest to 10 and generates a spare change for your expenses. 

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With the Jar app, you can choose an amount you’re comfortable stashing away each month or daily.

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The app automatically deducts the change from your bank account using UPI to invest in 99.9% pure digital gold through SafeGold. It’s all in your hands.

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ROI from Digital Gold

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Investing in digital gold is hassle-free and much more profitable than physical gold. Here’s how.

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A gold ornament or gold coin can only be made in 22-carat gold, which means it includes some impurities.

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But in digital gold, the investor gets the purest form of gold, which is of the highest value.

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As a result, while selling, it offers the greatest value compared to physical gold.

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So, when you invest a large lumpsum amount in digital gold, you can expect to sell it at a much higher rate in the next 5-10 years.

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Conclusion

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Both digital gold and actual gold have advantages and disadvantages. However, the investor has the final say.

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If you only want to buy gold for financial purposes, digital gold is far more convenient and beneficial than actual gold.

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However, because digital gold is unregulated and has a time limit on how long it may be held in digital form, you should investigate other kinds of digital gold investments such as sovereign gold bonds, gold ETFs, and gold funds.

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Whether digital or actual gold, an investment portfolio containing 10% to 20% gold is considered healthy.

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This helps portfolio diversification and hedges against volatility, currency, and inflation risk.

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It may take some time to transition from physical gold, but it is the only way forward. Invest in Jar today to revolutionize your Gold Investment Journey.