For most Indians, gold is more than just a metal โ itโs a symbol of wealth, safety, and tradition. Whether itโs for weddings, festivals, or family heirlooms, gold has always had a special place in our hearts.
But when it comes to investing in gold, many people make a common mistake: they treat jewellery and ornaments as investments, which often leads to poor returns. The truth is, not all gold is equal when it comes to wealth creation.
In this blog, weโll look at the best ways to invest in gold in 2026 โ from physical gold to digital options, Sovereign Gold Bonds, ETFs, and more โ so you can build a smart gold portfolio without emotional decisions.
Why Invest in Gold?
Before we dive into the โhowโ, letโs quickly see why gold is a smart investment:
- Hedge against inflation: Gold tends to hold or increase its value when prices rise.
- Safe haven: When stock markets crash, investors rush to gold, pushing its price up.
- Portfolio diversifier: Gold often moves opposite to equities, reducing overall risk.
- Long-term returns: Gold has given double-digit returns over long periods (5โ10+ years).
Now, letโs look at the different ways to invest in gold and which ones are best for returns.
1. Gold Jewellery (Ornamental Gold)
Buying gold in the form of rings, necklaces, bangles, etc., from jewellers.
Pros:
- Emotional value (gifts, weddings, festivals)
- Easy to buy and sell at local jewellers
- Universally accepted in India
Cons:
- High making charges (often 10โ25% extra)
- GST (3% on gold + 5% on making charges)
- Low resale value (you get less than market price)
- Risk of theft or damage
Verdict:
Gold jewellery is great for gifting and personal use, but not ideal as a pure investment. If you must buy jewellery, keep it as a small part of your gold portfolio.
2. Solid Gold (Coins, Bars, Biscuits)
Buying pure gold coins, bars, or biscuits (22K or 24K) from banks, jewellers, or bullion dealers.
Pros:
- Lower making charges than jewellery
- Higher purity (99.9% or 24K)
- Better resale value
- Can be stored in lockers or at home
Cons:
- Risk of theft or burglary
- Need for safe storage (locker cost)
- No regular income (unlike bonds or FDs)
Verdict:
Solid gold is a better investment option than jewellery, but only if you can store it safely. Best for those who want physical gold with minimal extra cost.
3. Gold Schemes (Jewellerโs Gold Savings Plans)
Many jewellers offer gold schemes where you pay a fixed amount monthly (like SIP) and get gold at the end of the term.
Pros:
- Disciplined saving habit
- No need to time the market
- Easy to start with small amounts
Cons:
- Returns are often similar to FDs or low-risk instruments
- Lock-in period and exit rules
- Risk if the jeweller goes out of business
- May not be regulated like mutual funds or bonds
Verdict:
These schemes are okay for gifting or personal use, but not the best for pure investment. Always check the jewellerโs reputation and compare returns with other options.
4. Digital Gold
Buying gold online in electronic form through apps (Paytm, PhonePe, Groww, etc.). Each unit is backed by physical gold stored in secure vaults.
Pros:
- Start with as low as โน1
- No making charges or GST on the gold itself
- Easy to buy/sell online
- No storage risk
- Can sometimes take physical delivery
Cons:
- Not all platforms allow physical delivery
- Platform fees or storage charges may apply
- Less regulated than mutual funds or bonds
Verdict:
Digital gold is a great option for small, regular investments and those who want gold exposure without handling physical metal. Ideal for SIP-like investing in gold.
5. Sovereign Gold Bonds (SGBs)
Government-issued bonds where you invest in gold, but the bond is held in demat form. Issued by RBI and available through banks and brokers.
Key Features:
- Lock-in period: 5 years (can exit after that, full term is 8 years)
- Interest: 2.5% per year (paid semi-annually)
- No making charges or GST
- Redemption in cash (no physical gold)
- Tax benefits on long-term capital gains
Pros:
- Safe (backed by Government of India)
- Earns interest + capital gains
- No storage or theft risk
- Tax-efficient for long-term investors
Cons:
- Lock-in period (not suitable if you need money in 1โ3 years)
- Redemption only in cash
Verdict:
SGBs are one of the best ways to invest in gold for long-term investors who want safety, interest, and tax benefits.
6. Gold ETFs (Exchange Traded Funds)
Gold ETFs are mutual fund schemes that invest in physical gold and trade on stock exchanges (NSE/BSE).
Pros:
- Tracks domestic gold price
- No making charges or GST
- High liquidity (can buy/sell like shares)
- No storage risk
- Transparent pricing
Cons:
- Need a demat and trading account
- Small tracking error
- Brokerage charges on buying/selling
Verdict:
Gold ETFs are perfect for stock market investors who want pure gold exposure with low cost and high liquidity.
7. Gold Fund of Funds (FoFs)
A mutual fund that invests in gold ETFs (a โfund of fundsโ). You donโt buy gold directly, but get exposure through ETFs.
Pros:
- Can invest via SIP (as low as โน100โโน500)
- No need to manage multiple ETFs
- Good for long-term gold exposure
Cons:
- Higher expense ratio (fund charges + ETF charges)
- Slightly more expensive than direct Gold ETFs
Verdict:
Gold FoFs are good for mutual fund investors who want a simple, SIP-based way to invest in gold, even if they pay a bit more in fees.
How to Choose the Best Way to Invest in Gold?
Hereโs a simple rule to pick the right option based on your goal:
1. For Long-Term Wealth & Safety
- Best options: Sovereign Gold Bonds (SGBs) + Gold ETFs
- Why: Safe, tax-efficient, and earn interest (SGBs) or track gold price closely (ETFs).
2. For Small, Regular Investments (SIP Style)
- Best options: Digital gold + Gold FoFs
- Why: Start with โน1 or โน100, no storage risk, and disciplined investing.
3. For Physical Gold Lovers
- Best options: Gold coins/bars + some digital gold
- Why: Own physical gold with low making charges, plus digital for flexibility.
4. For Gifting & Personal Use
- Best options: Jewellery + gold schemes (from trusted jewellers)
- Why: Emotional value matters more than returns here.
Key Takeaways: Best Ways to Invest in Gold
- Gold is a great hedge against inflation and market crashes.
- Jewellery is not the best investment due to making charges and low resale value.
- For pure returns, prefer Sovereign Gold Bonds, Gold ETFs, and digital gold.
- Use Gold FoFs if you want SIP-style gold investing via mutual funds.
- Always match your gold investment with your goal, time horizon, and risk profile.
Learn More:
- How to Start Investing in Mutual Funds in India โ Step-by-Step Process for Beginners
- Difference Between Mutual Funds and Stocks โ Which is Better for Beginners?
- Understanding NAV (Net Asset Value) in Mutual Funds โ What It Means and Why It Matters
- Risks Involved in Mutual Fund Investments โ Common Risks and How to Manage Them
Frequently Asked Questions (FAQs)
Q1. Do Sovereign Gold Bonds (SGBs) carry any tax benefit?
Yes, long-term capital gains on SGBs are tax-free if held till maturity (8 years). Interest is taxable as per your slab, but indexation is not allowed.
Q2. What is the Gold Monetization Scheme?
The Gold Monetization Scheme allows you to deposit idle gold (jewellery, coins, bars) with banks and earn interest. Itโs different from SGBs and is more for those with unused physical gold.
Q3. How do digital gold and new-age instruments beat physical gold?
Digital gold, ETFs, and SGBs have no making charges, no storage risk, and better liquidity. They also allow small, regular investments (like SIPs), making them more efficient for pure investment.
Q4. Can I take physical gold from SGBs or Gold ETFs?
No, SGBs and Gold ETFs are redeemed in cash only. If you want physical gold, buy coins/bars or use digital gold platforms that allow delivery.
Q5. How much of my portfolio should be in gold?
Most experts suggest keeping 5โ10% of your portfolio in gold (including jewellery, ETFs, SGBs, etc.). Adjust based on your risk and goals.
Q6. Is gold a good long-term investment?
Yes, gold has given double-digit returns over the long term (5โ10+ years) and acts as a strong hedge during crises. But it should be part of a diversified portfolio, not the only asset.
