invested in bullion
Gold ETFs invest in gold bars, which are just as good as investing in physical metals, but held electronically, like mutual fund units that are deposited in an escrow account. Each unit of a gold ETF is similar to very high purity physical gold. Like any other ETF, gold ETFs are listed and traded on stock exchanges. Therefore, it is easy to buy and sell gold ETFs at any time. So, if you are looking to buy gold from an investment standpoint, then gold ETFs can be a great option. In terms of portfolio allocation, gold ETFs are also in a better position.
Benefits of Gold ETFs
If you buy gold physically, then there are many problems in it. But compared to it, gold ETFs have many advantages. Let’s discuss these features…
You can buy gold even for as little as 50 rupees.
Investors can start investing in gold in gold ETFs for as little as Rs 45. This is the price of one unit of the ICICI Prudential Gold ETF yesterday, which is October 20th. There will be a slight increase, then up to 50 rupees. Therefore, an investor does not have to wait to invest large amounts of money to invest in gold, which is often the case when buying physical gold.
The cost of investment is relatively low compared to buying, holding and insuring physical gold.
The Gold ETF aims to buy gold with a purity of 99.5% or higher.
Compared to investing in physical gold, the cost associated with gold ETFs is much lower because there is no fee involved. For example: ICICI Prudential Gold ETF has an expense ratio of 0.5% which is the cheapest gold ETF.
Gold ETFs can be traded (liquidated) by one unit at any time during real-time NAV (Net Asset Value) trading hours on the exchange in accordance with the requirements of one unit. As a result, it is much easier than selling jewelry, coins, or bars.
acceptable as collateral
ETFs are accepted as collateral for loans.
If the gold ETF is held for more than 3 years, then the income received from it is considered as a long-term capital gain. This is a tax-efficient way to save gold.
Can be used as a tool to diversify your portfolio.
Things an investor should watch out for
ETF prices rise or fall like physical gold prices. As a result, gold ETFs are best used as a vehicle to profit from the price of gold. That is, an investor can enjoy the benefits of investing in gold without buying the real asset. When redeemed, the investor receives cash, not physical gold. In fact, with gold ETFs, an investor can be assured of accessing gold at an affordable price and in the safest possible way. In addition, when investing through an ETF, it is possible to deposit or sell units in smaller lots according to your requirements.
When investing in gold ETFs, an investor has the option of investing through a systematic investment plan (SIP) or opting for a one-time investment. Therefore, the buyer does not need to worry about its cleanliness, storage problems, etc. Therefore, add some sparkle to your investment portfolio this holiday season by choosing to invest in gold ETFs.