Jewellery vs Gold ETFs – Gold has been a symbol of wealth, beauty and security for centuries. In Indian households especially gold jewellery plays a big role during weddings, festivals and family traditions. But when it comes to making money from gold is buying jewellery really the best choice?
According to a Chartered Accountant (CA) while gold jewellery may look good on your wrists it may not be the smartest way to invest. If you really want your money to shine gold ETFs (Exchange Traded Funds) might be the better option.
What is Gold Jewellery?
Gold jewellery includes chains, rings, bangles, necklaces and more made from gold. People buy it for special occasions, gifts or as a traditional form of saving.
Pros:
- You can wear it and show it off.
- It is a part of culture and emotional value.
- Easy to buy at any jewellery shop.
Cons:
- Making charges (8% to 25%) increase the cost.
- Difficult to sell at full price later.
- Risk of theft if stored at home.
- Quality might differ from promised purity.
- Not very liquid – can’t sell instantly at market price.
What are Gold ETFs?
Gold ETFs are like mutual funds that invest only in gold. Instead of holding physical gold you buy units (like shares) of gold stored in digital form. Each unit represents a certain amount of gold usually 1 gram.
Pros:
- Easy to buy/sell online anytime through your demat account.
- No making or storage charges.
- 100% purity backed by government standards.
- No risk of theft.
- Transparent pricing – follows market rates.
Cons:
- You can’t wear it (obviously).
- Requires a demat and trading account.
- Some brokerage or fund management charges may apply (very small).
Financial Comparison: Jewellery vs Gold ETF
Let’s say you have ₹100000 to invest.
1. Buying Jewellery
- You buy a gold necklace for ₹1,00,000.
- Out of this ₹90,000 is the actual gold value.
- ₹10,000 is lost in making charges.
- Later when you want to sell it the jeweller may buy it back at only 95% of gold value.
- You may get ₹85,500 or less.
Loss: You lose around ₹14,500 not counting GST or emotional hesitation.
2. Buying Gold ETFs
- You invest ₹1,00,000 in a gold ETF.
- You get units equal to the gold value (1 gram per unit).
- After a year, if gold prices rise by 10%, your investment becomes ₹1,10,000.
- You can sell it online instantly with minimal charges (around ₹100 to ₹200).
Gain: You earn ₹10,000 – ₹9,800 even after fees.
So, when it comes to financial returns, gold ETFs clearly shine brighter.
Emotional Value vs Financial Sense
Buying jewellery often comes with emotional reasons – for weddings, gifts, festivals. That’s absolutely fine and sometimes necessary. But don’t confuse emotional purchases with smart investments.
A CA explains “Jewellery is a lifestyle expense not an investment. The moment you add making charges and resale issues it stops being financially smart.”
Tax Implications
Gold Jewellery:
- When you sell jewellery, capital gains tax applies.
- If held for more than 3 years, long-term capital gains (LTCG) tax of 20% applies after indexation.
- Proof of purchase is important for tax calculations.
Gold ETF:
- Same tax rules as jewellery.
- But since all transactions are recorded digitally it’s easy to calculate and pay taxes.
So, both are taxable but gold ETFs are more transparent and easier to manage.
Liquidity and Safety
- Jewellery: Selling requires visiting a shop. You may not get full value. Also there’s risk of theft or loss.
- Gold ETF: Sell any time online with just a few clicks. Safe and stored in digital form.
Storage and Maintenance
- Jewellery: Needs physical storage like lockers or safes. Banks charge for locker fees.
- Gold ETFs: Stored electronically in your demat account. No extra charges or risks.
Which One Should You Choose?
| Factor | Gold Jewellery | Gold ETF |
|---|---|---|
| Can Wear It? | Yes | No |
| Hidden Charges | High (making, storage) | Very Low |
| Resale Hassle | Yes | No |
| Liquidity | Low | High |
| Investment Returns | Lower | Higher |
| Safety | Risk of theft | Very Safe |
| Emotional Value | High | Low |
Conclusion:
If your goal is to look good, jewellery is the way to go.
If your goal is to grow wealth gold ETFs are the smarter choice.
Final Advice from the CA:
“Don’t let your emotions control your investments. Jewellery has its charm but gold ETFs give your money the power to grow. Make smart choices and let your wealth shine — not just your wrists.”