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Tuesday, November 30, 2021

Dhanteras 2021: How to invest in digital gold this year

Dhanteras 2021: Here's all you want to know about digital gold, its advantages and disadvantages and how to invest in it.

Written by Chetan Nayak | Mumbai |
Updated: November 2, 2021 10:27:14 am
digital gold, how to buy digital gold, digital gold investment apps, Dhanteras 2021 Invest In Digital GoldHere's all you need to know about Digital Gold and how you can invest in it easily. (Representational)

Dhanteras 2021: Gold remains a popular way to invest your money over the years. Today, however, like most other sectors, buying and keeping gold as an investment has too gone digital and you have a number of platforms like PayTM and Google Pay offering digital gold-buying alternatives.

Digital gold is, as the name suggests, entirely digital in nature and doesn’t involve you going down to your family jeweller to purchase a jewellery piece or a gold coin. In fact, the whole process of buying digital gold is online and doesn’t require you to go anywhere. But how does this work?

How does Digital Gold work?

You will have a certain amount of gold linked to your name or account, rather than you buying the same amount of gold and storing it in your home’s locker. This has a couple of advantages and disadvantages, but before we get there, let’s understand how the process works.

Since the gold is digitally linked to you, you needn’t worry about its safety at all times. Platforms like Google Pay and PayTM actually act as the middleman between you and trading companies. These trading companies will take the designated weight of gold you have purchased and keep it safe in their own lockers.

As a user, you can add more gold or sell some of it as and when you desire. The digital platforms offer their services 24×7 and if investment was your whole point of getting the gold, you will get your returns when you want in a few years without ever having to actually worry about the physical gold that you purchased.

When you want to sell the gold, you can do so via the platform and while there will be small charges for GST, you may end up saving more than you would with physical gold, where you may pay initial charges while getting the gold jewellery made, or later ‘used jewellery/second hand’ charges while selling it off. Note that the buying and selling price of gold may be different at the same point in time, though.

Advantages and disadvantages

The advantages are simple. There is the security of keeping your gold safe, and the convenience of not needing to go to a store. However, the aspect that is the most important is that digital gold is flexible to buy.

You can buy in amounts smaller than a single gram and start small, or go big if you choose. With physical gold, you can’t start investing if you don’t have enough money for the smaller piece of jewellery or coin that your dealer is offering.

Then there is the whole security and assurance of quality. Digital gold you buy from most platforms will mention if the gold in question is 24K (most pure form) or not.

The disadvantages mainly revolve around not having the gold in physical form. Most banks/ lenders will not give you a loan for your digital gold (as collateral). Similarly, you can’t turn your digital gold into actual jewellery. However, note that some platforms do offer to deliver your digital gold in physical form when you want, but you may be charged for the delivery.

Based on these pointers, you may find digital gold to be a better option as an investment. If you want to invest in gold digitally, here’s how you can do it.

How to invest in digital gold?

Investing in gold is really simple and most platforms will have a similar approach towards the process. For the purpose of an example, we will be using Google Pay to understand how to purchase gold digitally.

Note that irrespective of which platform you use, be sure to first check the entire terms of usage and policy before buying gold. Also check if the platform you are buying will levy any charges (like 3% GST) while buying/selling/delivering your gold.

Step 1: Open Google Pay’s Gold Locker

Install and set up Google Pay and link your Google Pay account to your bank account of choice. Once these steps are done, navigate to the gold locker by clicking ‘New Payment’ and in searching for “Gold” in the subsequent search box.

Step 2: Check price and initiate purchase

In the gold locker you will see a representation of how much digital gold you already own and the current buying price of the same. You can click on the “Buy Gold” button to proceed.

digital gold, how to buy digital gold, digital gold investment apps, How to buy digital gold on Google Pay. (Express Photo)

Step 3: Enter amount and complete the transaction

You can enter your amount on the screen and a real time translation of how much gold (in weight) that buys you is displayed below. You will also be able to see the current price of gold with and without the 3 per cent GST which will be applied to you.

Complete the transaction to proceed and once done, you should see the purchased gold in your Gold Locker as seen in the picture above.

Step 4: Selling/Delivering your gold

To sell or deliver the gold you have in your locker, repeat Step 1 to reach your Google Pay Gold Locker and you will now see new buttons on the bottom of the screen, including the sell and deliver buttons.

digital gold, how to buy digital gold, digital gold investment apps, Delivering and selling options for your Digital Gold on Google Pay. (Express Photo)

Should you choose to sell your gold, you will see the selling price in real time and the money you will get from selling your gold. Choosing the ‘Deliver’ option will require you to first enter a PIN code, following which the app will show you a list of gold weights that you can get delivered to you.

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