An incessant rise in gold prices has got Asansol-resident Anagha Das interested. Unsure of whether her timing is right, this 30-year old wants to start small - say Rs 5,000 a month.

"I want to start with an option that does not eat into my investments by way of charges," says Das.

There are four avenues to invest in gold.

You can do so through physical gold (coins and bars), gold exchange-traded funds (ETFs), feeder funds and the e-series (popularly called, e-gold) launched by the National Spot Exchange.

Of these, paper gold is favoured unanimously as an investment avenue.

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Buying physical gold is not attractive because of the higher purchase price and lower selling price. Storage and safety are the other issues.

Gold ETFs, the oldest form of paper gold, are not favoured by many, as these require a demat account to invest. Fund houses levy an expense ratio of only one per cent.

But the extra charges come by way of the brokers' fee of up to 0.5 per cent. The annual maintenance cost of a demat account is Rs 400-500.

So, if Das were to take this option, her initial costs in the first month would be Rs 475-575, after factoring in the cost of setting up a demat account.

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Her net investment: Rs 4,425-4,525. No wonder, financial planners say Das should use this avenue only if she is investing a lump sum. Since she wants to start small, it does not work for her.

Next is the e-gold option. The costs here are similar, but only in the first month. Since e-gold allows Das to invest through systematic investment plans (SIPs), her first month's cost (Rs 400-500) would reduce from the second month, as she will be only incurring brokerage costs.

"One can accumulate the units over time. And, use these for child's marriage or making jewellery in the future," says a financial planner.

However, if you opt for physical delivery, costs will increase further.

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Financial planner Pankaj Mathpal says the delivery option should be the last resort, because of the delivery fee of Rs 200, irrespective of the quantity, and Rs 50 for every such request charged by the depository.

At present, the National Spot Exchange allows exchanging e-gold units into coins or bars of 8, 10, 100 gm and one kg.

It charges Rs 200 each for conversion of 8 and 10 gm coins, Rs 100 for 100 gm and no charge for one-kg bar.

You will also have to pay a value-added tax at one per cent and Octroi for conversion of electronic units into physical coins (for Mumbai = 0.1 per cent).

You can buy gold in its physical form, such as coins and bars, only from banks and jewellers.

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Typically, banks will charge you between 10-15 per cent higher than the market price. Jewellers will sell it for 5-10 per cent higher.

The option is the post office. They charge a premium of 15-20 per cent on gold coins.

If Das were to purchase gold from banks, jewellers or post office, she will lose anywhere between five and 20 per cent (Rs 250-1,000).

Finally, there are gold feeder funds.

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"If you do not have a demat account, gold feeder funds are a good option, as it does not make sense to open a demat account only for buying gold via ETFs," says Hemant Rustagi of Wiseinvest Advisors.

In addition, there is an option to do SIPs as well. The only expense here is the expense ratio of 1.5 per cent.

This implies that Das will be able to save Rs 4,925 (expense ratio Rs 75) the highest among the four options.