Physical Gold Vs Gold ETF Vs Nifty ETF: Which Is Better Diwali Investment?

Diwali festival signifies not just prosperity and joy, but also is an auspicious occasion for investments to aim for a hefty fortune. Gifting securities during festival times or on any occasion is an excellent way to share your investments with friends or family and can include Equity Shares, ETFs, and Mutual Funds, regardless of the quantity involved, Gopal Kavalireddi, Vice President - Research at FYERS said.

Demand for sweets, gold, properties, vehicles and consumer durable products is high during the Diwali festival. However, there are many digital investments such as stocks, mutual funds, digital gold, ETFs, and debt instruments among others. During this festival, Kavalireddi touches upon the key factors related to physical gold, ETFs in gold and Nifty.

Here's what he has highlighted:

Physical Gold:

In India, gold has always played a significant role in the country's culture, and Indians have exhibited an appreciation for the yellow metal for many reasons. Traditionally, gold has been a preferred investment during auspicious occasions.

But with significant investor interest, Gold ETFs also have become an attractive investment avenue.

Both physical gold and gold ETFs have their advantages and disadvantages. Though physical gold has a high emotional and cultural value, preferred during auspicious occasions, it also requires storage and safety arrangements, with concerns about its purity and making charges.

Gold ETF:

On the other hand, gold ETFs are convenient and cost-effective, as they trade on stock exchanges like any company's share, without storage or safety concerns. Moreover, gold ETFs provide liquidity without any lock-in period or exit loads, making it an attractive investment option for short-term investors.

However, gold ETFs do not have the same emotional and cultural value as physical gold, and there may be concerns about the quality or quantity of gold held by the ETF. Ultimately it depends on the individual investor's preferences and investment goals as to whether they should invest in physical gold or gold ETFs.

Nifty ETF:

According to FYERS experts, the most commonly gifted securities are Nifty and Gold ETFs as they are easy, very liquid and widely tracked among market participants. Over the last year, Nippon India Gold BEES has delivered close to 16 per cent returns in comparison to Nippon India Nifty BEES at 8.2 per cent returns. Diversification across asset classes reduces the risk and volatility of any single asset while providing better returns over a particular period.