This Dhanteras, investors can invest in precious metals with amounts as small as Rs 500 per month. Know how digital gold and silver SIPs work.
This Dhanteras, you may consider investing in systematic investment plans (SIPs) of digital gold and silver. When we think of SIPs, we think of mutual funds. However, you can also invest in gold and silver through SIPs. These SIPs help you to invest a fixed amount in digital gold and silver regularly.
“Gold or silver SIP means you are buying digital gold and silver in a small amount every month. The SIP investment can be started with a minimum amount of Rs 500 per month with no limit on the maximum amount. The consumer can choose from a variety of SIP investment tenure options, ranging from one year to 10 years. And at the end of SIP tenure, total accumulated digital gold can be redeemed into cash, coin, bar or jewellery,” says Renisha Chainani, head of research, Augmont Gold For All, an integrated gold firm with operations from refining to retailing.
This means that if you are investing in gold through SIP, you can redeem the units for jewellery as well if you so wish. At the time of buying and redemption, the price will be pegged to the price of digital gold or silver on the platform.
SIP in gold or silver holds the advantage of small investments as the others SIPs have. “One can invest according to their convenience and budget. This encourages investors to make a disciplined investment in gold, accumulate gold and steadily build wealth,” says Prithviraj Kothari, managing director of RiddiSiddhi Bullions Limited (RSBL), a company that specializes in bars and coins of various precious metals such as gold, silver and platinum. The company has a festival offer in which for the quantity of gold purchased, the buyer gets the same quantity of silver free.
All the reasons why SIPs are a smart way to invest hold for gold and silver SIPs too. “An SIP relieves investors from the hassle of timing the market, gives the benefit of cost averaging, offers the power of compounding and provides investment convenience,” says Chainani. Instead of investing money in a lump sum, one may spread it with the help of SIPs.
“Other benefits include a minimum investment amount, diversification and no Demat account requirement,” says Kothari.
What Should You Check?
The low barriers to entry into the trade of digital gold or silver with almost no regulatory oversight has made it attractive for fraudsters. “One should always buy gold or silver SIP from an authenticated source only by checking the background of the company and the payment partner,” says Kothari.
A limited number of platforms and companies offer these products, so checking the authenticity is of utmost importance.
At the time of redemption, if you want to redeem your units for physical gold or silver, the grammage of delivery can be in multiples of 0.1 gm, 1 gm or 5 gm. “One should also check the minimum grammage of the delivery,” says Chainani.
Buying gold and silver is considered auspicious during Dhanteras. This time, you can buy an SIP for the precious metals.