The Basics of Digital Gold

 The Basics of Digital Gold

Is digital gold really a safe investment? How different is old gold and digital gold? We will answer all these questions in Crazy2sat. In this tutorial, we will explain the exact importance of digital gold.

Today we will talk about IPOs, investment funds, the stock market and real estate, do not worry, we will get acquainted with everything related to the topic. 

In this article we will discuss the basics of digital gold.

We will explain the good and bad points of physical gold, as well as digital gold, we will talk about good investment and how to buy gold at a price below the market.

There are apps and platforms that have spread a lot in an attempt to sell you digital gold and they will tell you that it is good to invest in it, what to do and what to choose

First, we must understand what physical gold is, why we invest in it , what are the pros and cons of the subject 

Should I invest in physical gold or digital gold.

Investing in Physical Gold

If you wish to buy gold for jewelry, physical gold is a good investment.

But did you realise that buying physical gold actually costs 10 to 15 percent more than selling it? This implies that if you purchase gold for Rs 50,000, you would likely pay close to Rs 60,000 due to additional manufacturing fees. Additionally, you must pay GST, which is an additional charge of 3%.

There are yet more drawbacks, including:

• Physical gold's theft and impurity risks
• You must pay melting fees, and selling will diminish its value below what it is actually worth.
• Small quantities of real gold cannot be purchased. You can't just put up $100 or $500. You must purchase at least 1 gramme, which costs about 5000 rupees.
• no stable source of income. You can only benefit if you actually sell it for more money; interest payments on a monthly or annual basis are not permitted.
• We've just seen why gold bullion isn't a particularly wise investment. Let's now examine digital gold.

Investing in Digital Gold

Let's examine how digital gold compensates for the drawbacks of real gold so that we can better understand what it is.

First, let's talk about safety.

Bank transfers are used to exchange digital gold. Assume your friend wants 1000 rupees and you have an HDFC account. You would need to launch the app and send 1000 rupees to his bank account via UPI or NEFT. You didn't actually need to go to the bank or physically collect and deposit the 1000 rupees that you offered your friend. It was an entirely electronic process.

• Similar to this, you receive physical delivery when you purchase physical gold. Even if it's just a tiny gold coin, you are in charge of making sure it's safe. However, when you purchase digital gold from a firm, the gold is kept in that company's warehouse and your responsibility for its security is waived. The company is in charge of the security and safety of the gold. Additionally, the corporation has insured the warehouse, so you are still safe even if there is a theft or other unfortunate event that affects the facility.
• Next, given that you won't receive a physical delivery, you can choose to purchase gold for as little as Rs 100, Rs 500, or Rs 1000, depending on your preferences. Then, how the product is distributed is up to the corporation. They may keep one gramme of gold in their warehouse and mark it as belonging to five different customers who each paid Rs 1000 for it. As a result, it resembles mutual funds and is more readily available and affordable.
• Additionally, there is more liquidity because you can easily sell this gold whenever you want and no one will question its purity.

But other issues still remain that even digital gold cannot resolve. Like:

1. Taxes: Even in this location, you must pay the 3 percent GST.
2.  Regular Income: Unless you sell it for a high price, you will still not be receiving any regular income or profit.

The Sovereign Gold Bond was created to address these issues. Let's find out what that is then.

Investing in Sovereign Gold Bond

Let's go right in to what it has going for it.

1. Similar to Digital Gold, there are no additional fees associated with this purchase.
2. The best thing, however, is that sovereign gold bonds are exempt from GST, which means that there is no additional cost for purchase.
3. You receive annual interest on these bonds equal to 2.5% of the market value, which is an added benefit.
4. It enables you to use this as a second source of income.
5. Additionally, it allows you to profit from an increase in the price of gold in addition to paying you interest on your money like a bank would.

Additionally, RBI offers an 8-year "lock in to redeem benefit" for sovereign gold bonds. Because of this, you may only redeem it from the RBI after 8 years of purchase. This entire procedure is quick and easy to complete online.

If you invest Rs. 5000 now and its value rises to Rs. 10,000 eight years from now, you won't be required to pay capital gains tax on the Rs. 5000 you made. However, you must maintain it for 8 years, which is not required, in order for this to be possible.

The final piece of advice is now appropriate: how may gold be purchased at a lower cost than the market?

By purchasing the sovereign gold bond, but not as soon as it is published, you can achieve this. It will cost less to purchase if you wait a few days to buy it from the stock market.

It's all done now! Thanks.