India will celebrate Akshaya Tritiya 2019 on 7 May, a day that is considered auspicious by many for buying gold. No wonder the jewellery stores, whether brick and mortar or online, see a huge number of buyers. But in recent years, gold seems to have fallen out of favour for young investors for a variety of reasons. Concerns over purity, storage and returns have scared youngsters and made them move away to other asset classes like mutual funds, etc. But since the time ‘Digital Gold’ has launched in India, things are changing again, and youngsters, even millennials, are also considering starting small investments in gold. But what exactly is Digital Gold?
Digital Gold is a simple and transparent way to buy and sell gold instantly. Mobile wallet providers, which are quite popular among youngsters, have started offering digital gold on their platforms, in partnership with MMTC-PAMP. So, if you want to invest in digital gold this Akshaya Tritiya, here are a few things you should know:
-- You can buy gold online through Google Pay, Paytm, Mobikwik and PhonePe, or under the Gold Rush Plan of Stock Holding Corporation of India. All these gold buying options are offered either in association with MMTC-PAMP, or SafeGold, or both.
-- You can buy up to 99.99% 24 karat gold from these apps in denominations of as low as Re1. Earlier, to invest in physical gold, people had to wait till they saved enough amount to make the minimum purchase of say 1gm, which would cost over Rs 3,200 currently. But, with the advent of Digital Gold, this is no longer the case and you can make gold investment in fractions of grams. Due to its small investment size, it encourages people to invest even if they have limited income.
-- The gold, purchased for any value, will be stored on behalf of the user in secure vaults without a charge or at nominal cost. If gold is bought from the MMTC-PAMP platform, then there are no storage charges. One can keep gold for maximum for five years. However, after five years, you are required to either convert it into gold coins or sell it.
-- Similarly, if you are buying gold from SafeGold using PhonePe or Mobikwik, then there are storing charges. For gold bought on PhonePe through SafeGold platform, if the amount of gold is more than 2gm in the first two years, then there are no charges. If it is less than 2gm, then a charge of 0.05% per month is charged. On the other hand, gold bought from Mobikwik can be stored for maximum of seven years. There are standard processing charges plus GST.
--As compared to other asset classes, gold is considered to be the most liquid asset. But still when it comes to physical gold, there are a few liquidity-related issues. For instance, to sell physical gold, you need to visit a dealer, bank or a local jewellery shop. Moreover, you must have the purchase bill, else you will not get the complete resale value on your gold. But Digital Gold overcomes these issues as you can buy or sell anytime by just logging into the mobile wallet apps and transacting at the live gold price at that time.
-- When you purchase gold jewellery, you not only pay for the gold price but also for the making charges (7-25%) and tax. However, when you liquidate the gold jewellery, you never get making charges or the value for studded gems back. In case of Digital Gold, you trade only in pure 24 karat gold. There are no high making charges involved and the entire amount that you spend gets invested only in gold.
-- Besides Digital Gold, there is also an option of Gold exchange-traded funds (ETFs) that can be traded online. However, to invest in Gold ETFs, a demat account is necessary. On the other hand, Digital Gold can be easily traded online without the need of any account.
-- Every gram of gold accumulated in your Digital Gold account is backed by actual physical gold. This means that at any given time in future, you can convert your digital gold into physical gold which will be dispatched to you in the form of coins or bars at the address mentioned by you.
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