Gold Investment Calculator: Physical vs Digital vs Gold ETF
Not All Gold Is Created Equal
Gold has delivered approximately 10–11% CAGR in INR terms over the past 20 years, making it an excellent inflation hedge and portfolio diversifier. But the form in which you hold gold — physical, digital, ETF, or Sovereign Gold Bonds — dramatically affects your real returns after costs and taxes.
Gold Investment Options Compared
| Physical Gold | Sovereign Gold Bond (SGB) | Gold ETF | Digital Gold | |
|---|---|---|---|---|
| Purity guarantee | Depends on hallmark | Yes (RBI-backed) | Yes (99.5%) | Yes (99.9%) |
| Making charges | 10–25% | Nil | Nil | 2–3% spread |
| Storage cost | Yes (locker rent) | Nil (digital) | Nil (demat) | Nil |
| Extra income | No | 2.5% annual interest | No | No |
| LTCG tax | 12.5% (after 24 months) | Tax-free at maturity (8 yrs) | 12.5% (after 12 months) | 12.5% (after 24 months) |
| Liquidity | Low (need buyer) | Medium (5-yr exit window) | High (exchange traded) | High (app-based) |
Why SGBs Are the Best Gold Investment
Sovereign Gold Bonds dominate on virtually every parameter: no making charges, 2.5% annual interest on top of gold price appreciation, and zero capital gains tax if held to 8-year maturity. The only drawbacks are the 5-year minimum lock-in and limited liquidity compared to ETFs. For investors who can lock in for 5+ years, SGBs are objectively the best way to own gold in India.
How Much Gold Should You Own?
Most financial planners recommend 5–15% of your portfolio in gold. It acts as a hedge during equity market downturns and currency depreciation. Beyond 15%, you’re over-exposed to a non-productive asset. See how gold fits in your overall portfolio with the asset allocation calculator.