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A Beginner's Guide to Investing in Sovereign Gold Bonds

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Created on
April 26, 2023


What’s Inside

Did you know that gold has achieved a 6.5% increase in its price since the start of 2023? Gold investments are a great way to combat market inflation that impacts other investment instruments. Plus, gone are the days when buying physical gold was the only option, as you can own gold digitally through avenues like sovereign gold bonds. But how to invest in sovereign gold bondsand other gold instruments if you are just starting?

Stay with us as we traverse the entirety of gold investments and explore the different ways you can park your funds in gold to gain better returns!

Ways to Start Investing in Gold

Historically, Indian households have leveraged gold as a suitable hedge against inflation while appreciating the metal's lustre. Fast forward to the 21st century, the rise of mutual funds, bonds and equities has made gold investment easier, eliminating the need to visit a physical store.

Here’s how to invest in gold in India:

Sovereign Gold Bonds

The Reserve Bank of India offers sovereign gold bonds on behalf of the Government of India. Gold bonds are available in multiples of one, with 1 gram of gold as the mandatory minimum investment. The best part about sovereign gold bonds is that you receive an additional 2.5% interest annually on your investment. Plus, the lock-in period for most sovereign gold bonds is five years.

Gold Mutual Funds

Dedicated gold mutual funds invest at least a significant chunk or all of their investors’ money into gold or gold-related instruments. These fund houses can also invest in companies that mine or extract gold. Since these are mutual fund investments, you do not need to invest in physical gold directly. However, you gain returns based on the performance of the precious metal and the companies that acquire it.

Gold Exchange Traded Funds (ETFs)

Gold ETFs operate similarly to mutual funds, except these are funds that can be bought and sold on the stock exchange. One unit of a gold ETF is equal to one gram of gold. You can either invest according to the market trends displayed by gold or commit to a systematic investment plan to average your holdings.

Benefits of Investing in Gold

While gold is a fluctuating instrument, it has always provided a method of diversification for investors. But is gold a good investment? Here are some reasons why it’s a great addition to your portfolio:

High Liquidity

Gold is constantly in demand due to its use as jewellery and high monetary value compared to other metals. Hence, you can sell your gold quickly if you need funds.

Safeguards against Inflation

The value of gold is independent of the movements of the financial market. When the prices have increased, the value of gold hasn’t gone down or depreciated to mimic the trend. On the contrary, the price of gold goes in the reverse direction of inflation, making it a safe investment option.

Portfolio Diversification

Is gold a good investment? One of the major reasons it is considered good is diversification, a reliable way to minimise investment risks. For instance, if you invest in gold, stocks and index mutual funds, you can breathe a sigh of relief during the financial crisis in the market.

While the returns of shares and mutual funds may depreciate, gold might compensate for the temporary loss in profits. As an investor, you increase your chances of building long-term wealth.

Take First Steps into Gold Investments with Fi Money!

Start your journey with gold-based mutual funds and ETFs using Fi Money. With commission-free mutual funds and an intuitive user interface to accommodate both novice and seasoned investors, Fi Money offers over 800 mutual funds.

Stay assured of complete security as Fi operates under the guidance of EpiFi Wealth, a SEBI-registered investment advisor. Simplify your investments with multiple SIP options at the touch of a button. Better yet, Fi does not penalise you for missed payments!

Frequently Asked Questions

What is the best way to invest in gold?

 The best way to invest in gold is to purchase digital gold or invest in related mutual funds or ETFs to avoid direct interaction with the market.

Is gold a good investment?

Gold has always acted as a hedge against inflation and appreciated even during rising prices. It is a good investment to diversify your portfolio and stay secure against market movements.

How does buying gold help you diversify your portfolio?

The value of gold does not follow the general market trends. Hence, it generates a different response when other avenues like FDs and shares are downward.

Should I make a gold investment in India?

A gold investment in India is a good idea to leverage the value of the metal and build long-term wealth.


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
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A Beginner's Guide to Investing in Sovereign Gold Bonds


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