Most Indians still think of gold in the form of bangles, chains and coins bought from jewellers. But jewellery comes with making charges, purity doubts and resale losses that eat into returns. In 2025, average making charges still range between 8 and 20 per cent, and jewellers buy back at a discount. So the price of gold may rise, but the value of your jewellery rarely keeps up. If your goal is investment, not weddings, jewellery is the least efficient route.
Gold ETFs for simple, low-cost exposure
Gold exchange-traded funds let you invest in gold through your demat account just like buying a stock. They track domestic gold prices, have no making charges, and come with very low annual fees. Liquidity is strong because they trade on the NSE and BSE, and you can buy or sell even small quantities. This makes ETFs ideal for monthly SIP-style investing, especially for young investors who want exposure without dealing with physical storage or purity worries. For most average savers, this is the cleanest way to hold financial gold.
Sovereign gold bonds for returns plus interest
SGBs are the most rewarding gold option today because they combine two benefits: the price of gold and a fixed 2.5 per cent annual interest paid by the government. You also avoid storage issues and, most importantly, any capital gains tax if you hold the bond till maturity. This makes SGBs one of the most tax-efficient assets available to retail investors. In 2025, SGB can only be bought in the secondary markets as the RBI is not issuing new tranches since February 2024. But if you get your hands on them, SGBs can be your primary gold vehicle if you’re thinking in terms of five to eight years or more.
Gold mutual funds for investors without demat
If you don’t have a demat account, gold mutual funds offer an easy way to invest through any regular mutual fund platform. These funds buy gold ETFs on your behalf and let you set up SIPs. They do have slightly higher expenses than ETFs because of the fund structure, but they are still far more efficient than buying physical gold. For people who prefer app-based investing and don’t want the complexity of demat accounts, gold funds provide a comfortable middle ground.
Digital gold for small, flexible purchases
Digital gold lets you buy tiny amounts of 24-karat gold from platforms like PhonePe, Paytm or brokerage apps. It’s stored securely by the provider, and you
can sell it back anytime or convert it to physical coins. This option works if you want flexibility or are building small holdings over time. But it’s best used in moderation because different platforms have different pricing, and long-term storage fees may apply. Think of digital gold as a convenience tool, not your primary gold investment.
The bottom line for average investors
Gold still plays a useful role in a portfolio, especially during inflation or market uncertainty. But jewellery shouldn’t be your investment choice. Once you shift to ETFs, SGBs, gold mutual funds or even small amounts of digital gold, you get better purity, lower costs and far stronger long-term returns. Treat gold as a 5 to 15 per cent part of your overall portfolio, and choose the option that fits your comfort, time horizon and tax situation.
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