SGB (Sovering Gold Fund) is the best way to invest in Gold.
1. It is better than Physical possession of Gold since it is in electronic format and can be held in DMAT account. So more safety and no handling charges
2. It gives 2.5% additional interest paid by the government
3. It is backed by Govt of India so reasonably high level of safety
4. It can be traded in secondary market for buying/selling. Although the secondary market is not fully developed (the trading volume is low so spread is wide)
5. Its price will be similar to price of gold in the real world so you will get full benefit of any increase in Gold Price
Only disadvantage I can see if you might have to hold on to full maturity if secondary market is not paying a good price but that is low probability and there is exit path for the same.
Hence it is better than ETF, Physical possession of Gold etc.
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