Investment Tips: Smart Ways to Invest in Gold and Calculate ROI

Investing in gold is considered as a great opportunity to earn higher returns. There are many ways to invest in gold. Experts say it is a safe heaven asset, and its price tends to rise during times of economic fluctuations caused by conflicts or wars. Thus, investment in gold can be a strategic step. Let’s understand the process of investing in gold and how to calculate ROI (return on investment).

You can invest in bonds and different schemes. Before investing in any platform, we must conduct research into the past performance of certain bonds and schemes. It could be a smart step while taking an initiative to invest in gold.

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1) Physical Gold: Physical gold is basically coins, biscuits, jewellery and bars. This is the traditional form of investment in gold. It is also considered as secured. Gold jewellery frequently has exorbitant manufacturing costs, so your total return may be lower. Furthermore, there are risks from theft and the possibility of harm.

2) Digital Gold: Many investors choose digital gold, which is a paperless option. With just 1 Rupee, you may begin buying digital gold. You can begin engaging in digital gold transactions at market value and redeem them when you sell. You may choose to redeem the worth of your investment return on these transactions, or you can choose to have gold delivered physically or at that value.

3) Gold Exchange Traded Funds (ETFs): Due to their trading on stock markets, they are very liquid and easy to purchase and sell. The possibility of theft or damage is reduced and the need for storage is eliminated.

4) Sovereign Gold Bonds: The duration of these bonds is often 8 years, with a 5-year lock-in period. This fund is supported by gold, but it can only be redeemed in cash and has no management fees. Sovereign gold bonds, which are overseen and regulated by the Reserve Bank of India, were first established by the Indian government in 2015.

5) Savings Schemes: These plans resemble a SIP in which you make a monthly deposit to a jeweler. The program may last for 11 months, two years, or more. You may buy the gold for the amount you invested when the plan expires or matures. Before investing, be sure to research their regulations.

What is Return on Investment (ROI) and how to calculate it? 

Return on Investment is a metric to measure the profitability of a gold investment.

ROI = Net Profit / Cost of Investment X 100

Net Profit is: Total Earnings (Current/Selling Value) — Cost of Investment

(Disclaimer: Given the input is on an information basis, please seek professional advice.)