Digital gold vs physical gold: Which is right for your Diwali portfolio?

Every Diwali, the same scene unfolds. Families gather, sweets fill the kitchen, diyas flicker on balconies and somewhere in between, gold becomes a topic of conversation. But in the past few years, the questions have shifted. It’s no longer just, “Should we buy gold?” Today, it’s, “Which type of gold should we buy?” Having worked in financial services for over two decades, one thing remains clear: gold always matters. What has changed is how we choose to hold it.

The Timeless Value of Physical Gold

A client once asked if physical gold was “outdated.” My answer? Not at all. Physical gold still has qualities that digital can’t replace. Holding a coin or a piece of jewellery gives a sense of reassurance that many of us value deeply. In India, gold carries cultural and emotional weight at weddings, festivals, and family traditions.

Physical gold is also practical. Walk into any jewellery store, and you can liquidate it. No internet, no app, just tangible security. That’s real value, especially for those who remember days when financial systems were not as robust.

The challenges, however, are real. Making charges often 15-20% immediately reduces returns. Safe storage is always a concern. And when selling, verifying purity can become a headache. These structural inefficiencies affect both peace of mind and the eventual value of your investment.

Digital Gold: Modern, On Tips, Flexible

When digital gold first appeared, many were skeptical. Gold you can’t touch, stored somewhere in a vault? It felt abstract. But over time, people realized its advantages. You can start with very small amounts, build wealth gradually, and automate investments through a gold SIP. Purity is guaranteed, usually 24-karat. Selling is instant during market hours, and lenders are increasingly offering quick loans against digital gold. No making charges, no storage worries, just simplicity and efficiency.

Digital gold does come with considerations: platform stability, regulatory maturity, and the lack of physical possession, which can feel intangible. And culturally, you can’t gift a wedding with a push notification.

How to Decide: A Simple Framework

Investors thrive not by choosing one over the other, but by understanding their purpose:

● Purpose: Planning for a wedding or special ceremony? Physical gold wins emotionally. Building an emergency fund or long-term wealth? Digital gold is efficient.

● Investment Horizon: Long-term cultural or family preservation? Physical gold has stood the test of centuries. Medium-term growth with quick liquidity? Digital gold is ideal.

● Comfort with Risk: Some sleep better knowing gold is in their hands. Others trust insured vaults.

A balanced approach often works best: perhaps 70–80% in digital gold for liquidity and consistent growth, and 20–30% in physical gold for cultural and emotional needs. These aren’t strict rules but just starting points.

This Diwali, Think Beyond Either-Or

Gold is more than an investment. It’s security, legacy, and love passed across generations. Digital gold doesn’t replace physical gold. It expands your options. It separates the cultural from the financial, the traditional from the practical. This Diwali, before buying, ask yourself: What am I really trying to achieve? What are my family’s needs, my comfort with risk, my timeline? The right choice comes from clarity, not trends.

Because at the end of the day, whether digital or physical, gold remains what it always was: a store of value, a symbol of prosperity, and a way to protect the future you are building.

(Views are personal; the author is Joint Chairman & MD, BajajCapital Ltd)