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Gold has been a trusted investment for centuries, offering financial security and stability. However, with modern financial instruments, investors now have multiple ways to invest in gold. Two of the most popular options are Gold Exchange Traded Funds (ETFs) and physical gold coins.
For long-term investment goals—spanning 10 to 20 years—choosing the right form of gold investment is crucial. This guide compares Gold ETFs and gold coins on factors like returns, safety, liquidity, taxation, and storage to help you decide the better option for wealth growth.
Gold ETFs are exchange-traded funds that invest in physical gold and track the price of gold in real time. These funds are listed on stock exchanges and can be bought or sold like shares.
Gold coins are physical gold assets issued by banks, jewelers, or government authorities. Investors can buy them in different weights, starting from 0.5 grams to 100 grams or more.
Verdict: Gold ETFs are more cost-effective for investment.
Verdict: Gold ETFs are safer and hassle-free.
Verdict: Gold ETFs provide higher liquidity and better resale value.
Verdict: Gold ETFs are more tax-efficient, as they avoid GST.
Historically, gold has given an average return of 8-10% per annum. However, additional costs reduce net returns:
Investment Type | Investment Amount | Expected Annual Return | Value After 10 Years (8% Growth) | Expenses | Net Value After 10 Years |
Gold ETF | ₹1,00,000 | 8% | ₹2,15,892 | 1% Fund Fee | ₹2,13,733 |
Gold Coins | ₹1,00,000 | 8% | ₹2,15,892 | 10% Making Charge + 3% GST | ₹1,88,274 |
As seen in the table, Gold ETFs give better long-term returns as they avoid extra costs.
Verdict: If you want investment only, ETFs are better. If you want gold for future jewelry, coins are preferable.
Factor | Gold ETF | Gold Coins |
Investment Cost | ✅ Lower | ❌ Higher (GST + Making Charges) |
Storage & Safety | ✅ Digital, No risk | ❌ Physical storage needed |
Liquidity | ✅ High | ❌ Lower resale value |
Tax Efficiency | ✅ No GST, Indexation Benefits | ❌ GST applicable |
Returns Over Time | ✅ Higher (No Extra Charges) | ❌ Lower (Charges Reduce Value) |
Usability | ❌ Cannot be used as jewelry | ✅ Can be converted into ornaments |
For investment purposes over 10-20 years, Gold ETFs are the better option due to higher returns, lower costs, better liquidity, and safety.
However, if your goal is gold for personal use (weddings, gifting, jewelry), gold coins may be more suitable despite the extra costs.
Choosing the right investment depends on your financial goals, risk appetite, and purpose of investment. For pure returns and wealth creation, Gold ETFs are the best choice for the long term.