Festival time is the best opportunity for accumulation of a few assets and gold is a preferred choice among Indian households who wish to purchase this metal not only for investment but also because it is considered auspicious.

Gold has long been a popular investment option, and it is especially popular during Diwali. Often when it comes to gold, physical gold is what comes to mind. But that is not it. There are several different types of gold investments available, each with its own advantages and disadvantages. The prices and availability of physical gold can vary based on the prevailing market rates, purity of gold, making charges, and other factors. It’s important to buy gold from trusted sources to ensure its purity and authenticity.

Here are some of the most popular options for gold investment.

Physical Gold

Traditional and modern jewellery designs made of gold are popular purchases during Diwali. It is a significant tradition during the festival, where families often buy jewellery as gifts or for personal use. This is the most traditional form of gold investment, and it involves buying gold coins, bars, or jewellery. Physical gold has the advantage of being tangible, which gives investors peace of mind and the option to use the gold for personal purposes. However, physical gold can be expensive to store and insure, and it may not be as liquid as other types of gold investments.

Also Read: Buying silver this Dhanteras? Don’t make these 10 mistakes!

Gold ETFs

Gold ETFs are a type of mutual fund that invests in gold. This means that investors can get exposure to the price of gold without having to physically buy and store the metal. Gold ETFs are more liquid than physical gold, and they can be traded on stock exchanges. However, gold ETFs come with expense ratio and other charges that you must be aware of before investment.

Sovereign Gold Bonds (SGBs)

SGBs are government-issued bonds. This makes them a safe and secure investment option. SGBs also offer an annual interest rate, which can boost returns. However, SGBs have a lock-in period, which can limit liquidity but often offers decent stable and fixed returns.

Gold mutual funds

Gold mutual funds invest in a portfolio of gold-related assets. This can provide more diversification than investing in physical gold alone. However, gold mutual funds can also have fees. Investing in gold mutual funds allows individuals to benefit from the potential appreciation in the value of gold without the need to directly buy and store physical gold. The performance of these mutual funds is directly correlated with the performance of the underlying gold-related assets they invest in.

The best type of gold investment for you will depend on your individual circumstances and investment goals. If you are looking for a safe and secure investment with the potential for long-term growth, then physical gold, SGBs, or gold mutual funds may be a good option for you. If you are looking for a more liquid investment with the potential for capital appreciation, then gold ETFs or digital gold may be a better choice.

If you plan to invest in gold ahead of Diwali and Dhanteras, digital gold appears most sensible. You can choose from Sovereign Gold Bonds (SGBs), gold ETFs and mutual funds for market-linked returns. Besides appreciation, SGBs also offer annual interest to investors. Investors can earn a fixed rate of 2.50 per cent per annum, semi-annually, on the nominal value. Also, you can take loans using these Bonds as collateral.

Hope these options can help you make a better decision before you plan to purchase gold this festive season.

(The author is CEO, Bankbazaar.com. Views are personal)