If you are considering investing in gold, then investing in a Gold Exchange Traded Fund (Gold ETF) can be a wise option. Gold ETF has given a return of up to 19% in the last year.
1) What is Gold ETF?
Gold ETF is an investment option based on gold prices. 1 Gold ETF unit = 1 gram of pure gold. It can be bought and sold like shares on the stock market (BSE and NSE). Physical gold is not available in it, but the investor gets money according to the current price of gold.
2) Facility of investing in small amounts
Units equal to 1 gram of gold can be purchased through ETF. It is easy to make small investments through SIP. Physical gold is usually sold in quantities of 10 grams or more.
3) Purity guarantee
ETF is based on the standards of the London Bullion Market Association. It guarantees 99.5% purity. There may be a difference in purity and price in physical gold.
4) No jewellery making charge
Only 1% brokerage and annual portfolio charge is charged on ETF. But on buying physical gold, you have to pay 8-30% making charge to jewelers and banks.
5) Security
Electronic gold or G ETF remains safe in your demat account, so there is no fear of theft. Additional expenses have to be incurred to keep physical gold safe.
6) Ease of purchase and sale
ETF can be bought and sold instantly due to high liquidity. Also, it can be used as security for a loan.
How to invest in Gold ETF?
For this, first of all you have to open a demat account with a brokerage firm. On logging in here, you will get the option to buy units of Gold ETF available on NSE or BSE. The amount invested in it will be deducted from your bank account. Two days after the order, ETF units will start showing in your demat account. You can easily sell Gold ETF whenever you want. Experts believe that investing in ETF when the price of gold falls can be a profitable deal in the long term.
