Gold is a natural resource metal found under the earth. It is a desirable possession for everyone. No matter how much or how little gold you have, it still signifies prestige. It always attracts investors who wish to gain high ROI (Return on Investment) for their financial needs. The high cost of its production is attributed to the fact that it is only found in a few places throughout the world due to its geographical location. Women used to purchase gold to make jewels. With the advent of financial literacy and awareness, investors are buying the best Gold ETFs.
Why do people think investing in Gold ETFs is a good idea?
It is always advised not to invest your lump sum money only in one financial instrument. You need to safeguard your investment by diversifying your funds in several other instruments and commodities. A Gold Exchange Traded Fund or Gold ETF is a commodity exchange-traded fund. The only underlying asset is gold which is an alternative to physical gold. Every investor knows that investing in physical gold can be difficult and insecure. Hence gold ETFs help you stay invested in gold without having any physical gold. Approximately one gram of gold is equivalent to one gold ETF unit.
Benefits of Gold ETFs:
- While trading in Gold ETFs, your money is invested in physical gold where every unit of it is equivalent to the highest purity of 99.5%, i.e. (24 carats).
- Investing in Gold ETFs is easy, and no physical storage is required, as you are trading in a dematerialized form of paper gold.
- You do not have to spend on making charges compared to physical purchases; hence you save 10-20 per cent of your money.
- The brokerage fees are minimal compared to investing in equities or other financial instruments.
- There are no entry, exit fees and lock-in periods. By putting in a minimum amount of as low as Rs. 500/-, you can start investing every month through SIPs (Systematic Investment Planning).
- Gold ETF India doesn’t include VAT, Sales Tax, GST, or Income Tax. You can sell them at an ongoing market price.
- Gold ETF investments protect you from global economic instability due to fluctuation in gold prices.
- Gold ETFs are tax-free as the income earned from them is classified as a long-term capital gain.
How to trade in Gold ETFs?
You need to open a Demat account if you wish to trade in Gold ETFs, after which you can invest in gold on an online platform through a broker. This is a simple and secure mode of buying or selling Gold ETFs.
How to Invest in Gold ETFs?
- Open a Demat account online on your bank or broker’s website as Gold ETFs are traded online.
- Upload your necessary documents such as PAN card, address proof, and Adhaar card as identity proof.
- Once your Demat account is opened, you can purchase a gold ETF as per your choice by making a one-time payment or paying through SIP mode.
- After purchase, the units get credited digitally to your Demat account. If you wish to redeem your Gold ETF, you will receive an equivalent amount of cash to the value of gold.
What are the best Gold ETFs in India?
Gold ETFs in India started in March 2007. Benchmark Asset Management Company Private Ltd. was the first to put up the proposal for Gold ETFs with (SEBI). It may be tough to decide which is the best Gold ETFs in India among many AMC offering various schemes because of its fluctuating risks. After looking at the profiles of various ETF schemes based on AUM (Assets Under Management), NAV (Net Asset Value) and returns, you can choose the fund of your choice that you feel is most profitable for you to invest in.
Below is the list of the few best Gold ETFs in India with their product name to help you decide and compare which fund you need to invest your money in.
| Gold ETF Name | NAV | Change | 1 Year Charge |
|---|---|---|---|
| IDBI Gold ETF (G) | Rs. 4823.47 | -0.20% | 13% |
| Invesco India Gold ETF (G) | Rs. 4701.26 | -0.20% | 12.7% |
| Aditya Birla Sun Life Gold ETF (G) | Rs. 47.61 | -0.20% | 12.6% |
| SBI Gold ETF (G) | Rs. 46.44 | -0.20% | 12.6% |
| HDFC Gold Exchange Traded Fund (G) | Rs. 46.36 | -0.20% | 12.5% |
| ICICI Prudential Gold ETF (G) | Rs. 46.31 | -0.20% | 12.6% |
| Axis Gold Exchange Traded Fund (G) | Rs. 45.18 | -0.20% | 12.7% |
How do Gold ETFs Work?
Gold ETFs depend on the daily market gold price, which is the same across India. It can be purchased and sold at any time on the stock exchange. They are like equity shares, and investors trade in them similar to trading in the stock exchange and other financial instruments. When you invest in Gold ETFs, it means you are investing in several gold units in the form of paper.
You can redeem them whenever you need funds digitally. Gold ETFs bares minimum risk due to global economic fluctuation hence do not cause you heavy losses. They are governed and regulated by the Security Exchange Board of India (SEBI). Gold ETFs safeguard your portfolio’s overall value during political or economic crises.
Why do investors highly prefer Gold ETFs?
It has become the investor’s preferred choice of investment because of its unique features like – You can invest in buying the highest quality of pure gold. Trading is very flexible and fast through online mode or on the app. There are very minimum brokerage charges and taxation based on the tenure you hold your investments. You can also avail the features of managing your portfolio, buying and selling units, and doing necessary research and analysis to help you make the smart selection.
Winding Up:
Gold ETFs are perfect for those investors who prefer to use gold as an investment option. Physical gold is difficult to store as it requires protection from theft. Gold in a dematerialized form is easy to sell or buy online and is highly secure. Gold ETFs are transparent and can be purchased at a low quantity or price, as low as the equivalent of one gram of gold. If you have an active Demat trading account, you can easily trade in Gold ETFs even on your smart devices like mobile phone or tablet using any AMC (Asset Management Company) app. It is very important before investing that you examine the performance of each best Gold ETF in India over the last few years – and select the right fund that will meet your investment goals.
