Digital gold-rate based investments are more attractive to investors

As news of recession inflation and stagflation go around and equity markets fluctuate gold is glittering more with every new daunting lsquotionrsquo Gold prices are going up up and away and attracting investorsAccording to the India Investment Behaviour report 2022 by the market research body Axis My India released in October 2022 53 per cent of the 5342 people they surveyed still preferred investing in gold And not just in actual bangles or chains digital goldrate based investments are also catching on And could soon supersede the traditional festive purchaseSo why are people marching to a gold that doesnrsquot glitter Niyati Thaker and Sayali Rai cofounders of Fincocktail a personal finance company say itrsquos convenience ldquoYoung investors donrsquot fancy ornaments and view gold only as a smart investment optionrdquo says Thaker ldquoThe variations of digital gold make it convenient and accessiblerdquo ldquoAlsordquo adds Rai ldquosince most other types of investment are online why go through the bother of safekeeping physical gold Rarely would a Gen Z or millennial investor have a bank lockerrdquoAniruddh Naik branding and marketing professionalDigital Gold comes in the form of Sovereign Government Bonds SGBsmdashbonds issued by the government against the gold they hold Exchange Traded Fund ETFsmdashstocklike purchases made on trading accounts against gold stored by respective companies and finally apps that allow fractional ownership where one can buy gold for as little as one rupee Overall itrsquos the lack or lowering of risk that makes the option shine ldquoThere are no risks involved as the reserve bodies that hold the gold are not likely to go bankruptrdquo says financial advisor Anand Valia ldquoTrading digitally is only a different method of investing in the same marketrdquoHowever the Securities and Exchange board of India under the SEBI Act 1992 Section 12 1 does not regulate digital gold with fractional ownerships Physical holding of gold against digital transactions may be difficult to verify In case of frauds it is unclear where complaints can be registeredNischay AG cofounder of Jar an app backed by SafeGold one of the three major companies of digital gold facilitating ownership investment says ldquoIndians are currently welcoming the idea of owning gold as an asset without actually being its custodian and fractional ownership is an important factor for thisrdquo Valia advises to ensure applications are checkedSayali Rai Niyati Thaker Ankur Jhaveri and Anand ValiaOther entities that provide this facility are Augmont MMTC PAMP and SafeGold Digital payment apps such as Paytm PhonePe Amazon Pay have tied up with them Prominent jewellers namely Tanishq Caratlane Kalyan jewellers PCJ and more also provide similar servicesAccording to the Axis report 11 per cent of investors from ages 18 to 60 years invest in digital gold but only 35 per cent recognise it The yellow metal in its digital mould is still catching on among the older lot that traditionally invests more The Axis report revealed that only 11 per cent of those aged between 45 and 54 buy paper gold the number drops to 8 per cent in the age group of 55 to 60Ankur Jhaveri cofounder of tax saving and money management portal Jackfruit says digital gold is still a niche investment ldquoOlder investors avoid it due to tech illiteracy or the mindset that one has to hold it to own itrdquo he says Thaker agrees ldquoMy friends and family invest in gold bonds but my mom still prefers jewellery I diversify my portfolio between physical and digital formsrdquoldquoAll their liferdquo says Aniruddh Naik a branding and marketing professional ldquomy parents invested in gold through the informal lsquobhishirsquo system with the jeweller where you invest say R1000 every month for 11 months and the jeweller adds R1000 as interest and you use the compounded amount to purchase gold Because of them I started buying gold in the early stages of my investment journey from a wellknown jeweller but I noticed they would insist on us buying a piece of jewellery rather than a coin or bar That obviously would eat into the savings as making charges can range between 3 per cent and 25 per cent of the entire amountrdquoThe Thane resident invested in ornaments for two years before switching ldquoLater I invested in ETFs and bondsrdquo says Naik ldquoEven though it is given against gold it was unclear if the growth in interest was against actual gold price Then about oneandahalf years ago I came across a plan where I could invest in digital gold liquidate it to buy an ornament and have it delivered to my placerdquo During last Diwali he liquidated some of his digital portfolio this wayThis bestofbothworlds appeal finds favour with Thaker too ldquoMy brotherrdquo she says ldquowho was out of town during Raksha Bandhan gifted me egold through an app It is an interesting way to add gold to the investment portfoliordquo However the apps now charge a high delivery which to Naik is akin to making charges ldquoItrsquos a huge conrdquo he says To use apps such as Jar one has to simply create an account and link bank accounts The auto pay option can be set to an amount which is deducted on a particular dayDigi gold is sensitive to variations in economic strengths ldquoPeople who canrsquot make a lump sum investment can accumulate gold over a period of timerdquo says Nischay It also assures purity and flattens any volatility while buying and selling since one is technically buying the purest form 24K and is assured of it ldquoIt saves the hassle of bargaining or worrying about not getting the same value in return as the price of 24K gold is the same across vendorsrdquo says Nischay