Gold is one of the more popular assets to be traded. It makes for good protection against inflation and any downturns in major currencies.
Although gold can be pretty volatile in the short term, it retains its value over the long term. This makes gold an option well worth considering.
If you’re thinking about investing in gold and how to buy gold in Zerodha, read on.
What Is Zerodha?
Zerodha is a financial services company focused on stock broking and trading. They produce a variety of platforms for various asset transactions. Zerodha is the largest digital stock broker in India.
Here are some of the platforms you may be interested in:
Zerodha’s flagship web-based investment and trading platform. There’s also a Kite mobile application for ease of access and portable trading.
The Kite platform relies on a complex stack and provides real-time investment and trading updates.
Coin by Zerodha is the largest direct mutual funds platform in India. Coin is considered to be the more relaxed investment app.
Console Is the central dashboard for your Zerodha account. It’s the back-office platform where you can keep track of your portfolio positions, stocks, and mutual funds.
How Do I Start Buying Gold?
Besides buying gold physically, there are many ways to invest in gold. You have a few options if you’re looking to buy gold in Zerodha.
According to Zerodha CEO Nithin Kamath, you can buy Sovereign Gold Bonds (SGB) or Gold Exchange-Traded Funds/Mutual Funds (ETF/MFs).
What Are SGBs?
Sovereign gold bonds, or SGBs, are considered to be the best option when buying gold. In simple words, SGBs are a digital way to invest in gold.
SGBs are backed by the Indian government and provide you with interest in your gold investments. Because the government guarantees gold bonds, it’s a safe way to invest in gold without the difficulties of physical gold jewelry.
It’s tax-efficient, provides you with returns via interest, and can serve as loan collateral.
What Are Gold ETFs/MFs?
ETFs are funds that trade like stocks. They consist of assets that are backed by gold or investments in gold futures.
As an investor, you don’t possess or own the physical commodity. Instead, you possess gold-related assets.
ETFs can simply be traded like stock; you go through an investment firm or fund manager. It’s a low-cost and efficient way to diversify your portfolio. However, ETFs can be pretty volatile and open up investors to liquidity-related risks.
Ways To Purchase Gold In Zerodha
Outlined below are the specific steps you can take to buy SGBs or ETF/MFs in Zerodha.
Step 1: Create An Account
- In the Zerodha site or mobile application, click on “Sign Up” found at the top of the menu.
- Enter your mobile number.
- Enter the OTP you received on your phone.
- Provide your details, PAN, Aadhar, and bank account.
To trade or invest in Zerodha, you need to open a trading account and a Demat account. Zerodha offers three types of accounts: Demat, trading account, and commodity account.
Step 2: Buying Gold In Zerodha
You can either buy SGBs and ETFs in the primary market, Coin by Zerodha, or in the kite application and website in the secondary market.
- Enter your kite credentials into the application or website.
- In the Market Watch search tab, search for the gold commodity you desire, either SGB or ETFs.
- Make sure you have enough funds in your Equity account. The new SGB issue will only be open for a specified period, so you need to have enough funds in your equity account until the open issue ends.
A lack of funds will result in Zerodha rejecting your order. You can disable this by consenting to “allow available funds in your account to place the order partially.”
- You will find either ETFs or SGBs that end with their maturity or expiry date. Choose whichever works best with your timeline and needs.
- Click on the “buy button.” Enter the quantity you wish to buy, your bid, and your buying preferences. You can change the order until the closing time of the issue.
- You must maintain the margin amount in your trading account for order execution.
- Once your order has gone through to the exchange, it will show in the “pending orders” until it is executed.
In the kite application, SGBs are released 10–15 days after issue. You can freely trade there, and it will take 2 days after your order for the SGBs to appear in your account as per the settlement cycle.
And there you have it! You’ve bought gold on Zerodha.
Is Buying Gold In Zerodha Risk-Free?
Zerodha offers one of the cheapest, flat-fee brokerage services. In addition, they offer brokerage-free equity delivery trading and mutual fund investments. Zerodha is a registered company and is privately held.
The true answer is, although Zerodha is a trusted company that provides proper and legal services, stock trading in itself isn’t risk-free. Loss is always a possibility depending on how you go about trading. Being smart and informed is key.
What Are The Risks?
People generally consider gold a safe option that maintains value through thick or thin. We can assess it as an insurance policy during trying economic times. Gold usually reacts inversely to the movement of the stock market.
An example can be how gold has retained its value during the Covid-19 pandemic. It outperformed its pre-pandemic rate. Global investment in gold is booming despite the weakened economies across the world.
The risks of investing in ETFs are like any other trading option. For one, ETFs can be a little more expensive than physical commodities due to brokerage fees. You can’t truly “own” gold when you invest in ETFs. Once again, there are risks brought about by liquidity and its volatility.
As for SGBs, on the other hand, they have a long maturity period of 8 years that can turn off many investors. SGBs are only open for purchase during a specific period; you cannot buy them anytime.
You cannot remove the risk of loss as gold can either rise or fall according to the price you bought it at.
Gold is a great way to diversify your investment portfolio. These digital options provide you with the opportunity to get into gold without having to experience the risk of physically stowing your gold away.
As this is a great way to hedge and diversify your investments, what’s stopping you from trying gold bonds or mutual funds today? Zerodha provides an accessible platform to get into trading. Gold is just one of the many investment options you can get into.
The information here may be a lot, but it’s hopefully taught you how to buy gold in Zerodha.
Martin Thomas, the owner of Sutter Gold Mining, is a true gold investment aficionado. With decades of experience and a wealth of knowledge, he is the go-to source for anyone navigating the vast world of precious metals. Martin has dedicated decades of his life to understanding the intricacies of the precious metals market and the best strategies for maximizing returns. His expertise in this field is unmatched, and his commitment to helping others make informed investment decisions is unwavering. With him as your guide, you’ll gain a deeper understanding of the gold market and learn how to make smart investment choices that will benefit you for years. With his guidance and wisdom, you will never have to worry about taking the wrong investment step again.