With the increasing demand for gold, the price of this precious metal is on the rise. Investors are resorting to a more flexible investment option known as digital gold to make the most of this situation. It is a secure online investment instrument that allows investors to buy certified 24k gold without any hassle. Whenever you buy the yellow metal through a digital gold wallet, the gold seller stores an equivalent amount of physical gold in a secure vault.
You, as an investor, can start making small investments as low as Re 1 and accumulate gold in your portfolio. There are popular digital gold wallets, such as eSwarna, PayTM, GPay, and PhonePe, which allow you to buy digital gold and store gold within the existing payment application.
They come with a secure gold locker where the gold is stored. It is worth pointing out that you can convert your digital gold into cash or physical gold anytime.
What is Digital Gold and How Does it Work?
Digital gold purchase refers to an instant purchase of gold that gets credited to the digital gold wallet. When you invest in gold, an equivalent quantity of 24K gold of 99.99% purity is stored in a secure vault under your name. It enables you to get digital gold delivered in physical gold coins or bars to your home address, and you can also sell it online without incurring any additional cost.
Benefits of Digital Gold in India
Digital gold is a far better investment option compared to physical gold. And here is how:
No additional cost
When you buy physical gold, you will have to incur additional making costs apart from the best price of the gold. The making charges generally range between 5% and 20% of the value of the gold. These costs are known as sunk costs as they can never be recovered.
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On the other hand, digital gold wallets entail no making costs. You do not have to incur any fee even when you redeem your gold in digital form, making it lucrative for investment purposes. But, converting digital gold into physical gold coins comes with making costs.
When you buy physical gold, you need to take measures to store it away safely. Gold buyers usually end up taking up bank lockers to hold their gold, and it comes with an additional cost, a recurring one, which gets added to your gold purchases. However, digital gold entails no such costs. You can store your gold in digital gold wallets, and the provider holds it for you in a secure vault.
We all know that the authenticity of physical gold is often questionable. Whether or not you can get authentic, gold depends on the genuineness of the jeweler. The authenticity of gold also differs from city to city and gold dealer to gold dealer.
Digital gold wallet eliminates such fears of authenticity. It enables you to get certified 24-karat gold of 99.99% purity.
Another benefit of digital gold wallets is they add a layer of security. Unlike physical gold, where there always exits a fear and risk of loss or theft, digital gold is always insured. Most gold providers ensure digital gold against theft or loss. Also, the digital gold is kept in secure vaults under your name by third-party vault providers.
While selling physical gold, you will have to go through authenticity checks. Most gold jewelers offer a lower market price than the purchase price. However, the benefit of digital gold is it can easily be sold online, 24×7, and you can get real-time prices. It means that you can buy and sell gold hassle-free.
Affordability and versatility in use
Physical gold is offered in gram multiples, which means that you will have to buy in 1gm, 5gm, 10gm, and so on. The minimum amount you will need to invest is Rs. 5000/-. As with digital gold, there is no such requirement.
It is the most affordable option to invest in gold. You can buy gold in minimal quantities, as low as Rs. 100/-. It is worth noting that most providers offer convenient SIP (Systematic Investment Plans).
Digital gold is one of the safest and easiest wealth-creating options in India. You can get digital gold for many uses, such as self-purchase or investment. It can also be used for gifting purposes where you do not have the budget to buy several grams of gold in physical form.