In India, gold has both cultural and monetary importance for ages. The crazy gold buying tendency during festive occasions or weddings in India is due to the fondness for gold in our culture and tradition for centuries. In the majority of Indian households, gold is considered as auspicious and comes to the rescue during an unprecedented financial crisis. The physical gold can be bought in various forms such as jewelry, bars, or coins. Apart from being a luxurious entity, Gold is also considered as the safest investment option in India. The various gold investment forms are physical gold, digital gold, gold bonds, gold ETFs, so on.
There has been a surge in global demand for gold in previous years and now there are different options available for consumers to buy gold. Many investors now see gold as a commodity with better investment opportunities. Due to the immense traditional significance, India is one of the largest gold consuming nations in the world. Due to the current COVID-19 situation, the best form of gold investment is Gold ETFs. Amidst the global pandemic, many financial experts advise investing in risk-free assets such as Gold ETFs. Due to the surge in gold prices, it is lower in demand and eventually impacts physical gold liquidity. During such crisis it is sane to invest in Gold ETFs whose liquidity remains unaffected as they are tradeable at the stock exchange.
Gold ETF is an exchange traded fund that aims to track and reflect the price of physical gold. In Gold ETFs you can make investments of even one gram of gold. This type of fund was launched in India in 2007 and has gained popularity due to its hassle free process and various benefits. Gold ETF is listed and traded on the National Stock Exchange and Bombay Stock Exchange like any other stock of a company. Gold ETF is nothing but your digital gold which has lesser expenses as compared to physical gold investments.
Gold ETFs have many advantages over other forms of gold investments. One can get their hands on better returns for short term or medium term investments. The main advantage over physical gold is that the consumer is exempted from the additional expenses spent in the form of making charges, storing costs, or jeweler margin. If you invest in Gold ETFs you are exempted from additional and unnecessary charges. Read below to know the benefits of the gold ETFs, how to buy gold ETFs online and tips before you invest in Gold ETFs.
Unlike physical gold, Gold ETFs do not levy any wealth tax. It is tax efficient and there are no additional charges in terms of VAT, sales tax, and security transaction tax. No wealth tax means you can hold on to your gold ETFs for a longer period of time.
When you buy physical gold risk of theft or burglary can be a safety issue. But Gold ETF is your electronic gold which can be safe can be stored as units in a Demat account. Hence, no security issues and fewer risk factors make gold ETF the safest asset. This also saves your money spent as charges on safe deposit lockers used to store the physical gold.
Each unit you buy is backed up by the highest purity of gold and you can easily track real time gold prices. Unlike physical gold price, which usually varies in different jewelers shop, the price of gold ETF units is constant everywhere. All the information about the current prices is public and instantly available. The transparent process of gold ETF makes it more beneficial than investments in physical gold.
The gold ETF can be used as collateral security when you are in need of monetary help from the financial institutions. If needed you can use Gold ETF as collateral for loans.
In gold ETF, one can make investments in the form of units. Each unit is equivalent to one gram of physical gold. Gold ETF assures hassle free trade and with the help of a stockbroker or fund manager, you can effortlessly buy and sell these units. You can buy gold units in smaller denominations like 1 unit which is equivalent to 1 gm of gold. However, this is not very likely when you go to buy pure physical gold from any jewelry shop.
As mentioned earlier that Gold ETFs are listed on stock exchange there are no entry or exit charges. As there are zero entry and exit load, gold ETFs becomes more cost effective and profitable.
The selling and buying of gold units are more flexible and efficient than buying physical gold. The liquidity is higher in Gold ETF as compared to physical gold. You can find different flexible gold ETF investment plans such as short-term, medium-term or longer-term.
It can be tricky to invest in gold jewelry as it holds a lot of sentimental value as well. This defeats the whole purpose of investing in gold as a safe investment that can rescue you during unpredicted financial uncertainties. While the gold ETFs can be easily sold and has lesser transactional expenses as compared to physical gold.
If you are convinced that Gold ETF is worthier than physical gold, the below mentioned point will help you to invest in Gold ETF online:
People who are willing to broaden their portfolio with the right exposure to the gold market can invest in Gold ETFs. If you are planning to invest in Gold ETF, following tips will come in handy:
In conclusion
No matter which type of funds you choose to invest in, it is necessary that you are cautious enough before you make decisions. Before you start investing in Gold ETFs it is essential that you understand its structure and how they operate.
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