The BuyT Desk
The yellow metal has served as the best hedge against inflation in the pandemic and mirrored again that it is one of the safest investment options. But unlike their descendants, Millenials prefer to investing in gold ETF instead of physical Gold that comes with the risk of depreciation (due to making charges, gold purity level, etc.). If you are also making up your mind to invest in yellow, keep the following points in mind.
What is a gold ETF?
This Gold exchange-traded fund (ETF) trades similar to Mutual Fund on the stock exchange. So, just like shares, you can buy and sell Gold ETF without keeping metal at home. Every unit of Gold ETF is equal to one gram of Gold of 99.5% purity. There are multiple investment fund options available that allow the customer to trade in gold ETF. A few of them are Axis Gold ETF, Nippon India Gold ETF, Kotal Gold ETF.
Six Benefits Of Investing In Gold ETF
No Price Variation – Yellow metal comes with depreciation, but it is not so with a paper one.
ETFs are purchased and sold without any deductions. Furthermore, the price of physical Gold differs based on geographical location. The rates of Gold vary to cover liquidation and other costs incurred in the trading of physical Gold.
Purity Of Gold – The purity standard of Gold ETF is 99.5 %. It is not the case with physical Gold, and also, the market lacks trust and transparency. The market is unorganized, and there is always a risk of not getting the claimed purity.
Liquidity – Gold ETF gives the convenience of buying and selling Gold which could not be compared with the physical gold transaction because it is traded on the stock market, which is organized and transparent.
No-Risk Of Losing It – The Gold ETF is stored in the Demat account, so the investor does not have to worry about its safety. Additionally, the investor saves on locker charges as well.
No Load of Entry and Exit – The Gold ETF is traded on the stock exchange. Thus the investor does not have to bear entry or exit charges.
No Direct Taxation Cost – Physical Gold attracts 3 % GST on its sale and purchase value. Gold ETF does not invite this cost as ETFs are securities, and the government of India has excluded securities from GST.
Conclusion: Gold has always been a safe investment option, and Gold ETF has made it even easier as there is no price cap for buying the Gold ETF. One can start with a minimum of Rs. 500 investment via regular monthly SIP in Gold FOF.
