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Oceanic Beginner's Guide to Investing in Digital Gold

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Discover the essentials of digital gold investment with our beginner's guide – your first step towards smart, secure, and convenient digital assets.

As times change, so do our investment strategies. For the modern investor, especially if you're just starting, venturing into digital gold can be a smart move.

Gold prices have risen over 125% in the last 10 years, demonstrating its strength as an asset class. There are a few key reasons why digital gold deserves consideration in your starter investment portfolio —

  • According to a World Gold Council report, gold can act as a hedge against inflation and currency risk.
  • When markets crash or currencies weaken, gold prices often rise as investors flock to its stability. Adding some gold can balance more volatile assets like stocks.

Best Methods of Investing in Digital Gold

When looking to add digital gold exposure to your investment portfolio, you have a few good options to consider.

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1) Gold ETFs

Gold ETFs (Exchange Traded Funds) offer a simple and flexible way to invest in digital gold. It is a commodity fund traded on a stock exchange that tracks the price of physical gold.

 

Each share of the ETF represents ownership of a small quantity of gold bars stored in certified vaults. Investing through Oceanic Finance Gold Trades allows you to buy or sell units of gold ETFs just like stocks.

Pros:

  • Extremely liquid - units can be bought and sold any time the market is open
  • Low investment amounts, often starting around Rs 100
  • Transparent holdings and prices
  • No storage fees or worries

Cons: 

  • Has an annual expense ratio, averaging around 1 per cent
  • No ownership of physical gold
  • Vulnerable to systemic risks in financial markets

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2) Gold Mutual Funds

Like gold ETFs, gold mutual funds aim to mirror domestic gold prices by investing in gold securities. The convenience and transparency are similar to gold ETFs but with slightly higher minimum investments.

Pros:

  • Professionally managed fund
  • Option for systematic investments like SIPs
  • Higher returns are possible through fund selection

Cons:

  • Expense ratios average 1.5-2 per cent 
  • No option to take delivery of gold
  • Vulnerable to systemic financial market risks

3) Sovereign Gold Bonds (SGBs) 

SGBs are government-issued bonds denominated in grams of gold. You receive 2.5 per cent fixed interest paid semi-annually, and the redemption amount equals the gold price on maturity. 

Pros:

  • Backed by the Indian government
  • Tax efficient - interest earned is tax-free
  • Can be used as collateral for loans
  • Convenient buying process online

Cons: 

  • Locked in for 5-8 year maturity periods
  • No option for early exit or trading
  • Quantity limitations on the purchase of each series

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When choosing between ETFs, mutual funds, and SGBs, consider factors like liquidity, costs, and investment goals. For instance, while gold ETFs offer liquidity and ease of trading, SGBs might be preferable for long-term investors due to their interest income and tax benefits

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