Hyderabad: We think of buying some gold during festivals and special occasions. With a little thinking, such purchases of gold jewellery can be turned into investments. All over the world, it is seen as a trusted and an inflation resistant investment tool. As its price is increasing in recent times, many people are coming forward to invest a lot of money in the yellow metal. Let's examine how to benefit from the Gold Exchange Traded Funds (Gold ETFs).
When it comes to smart investments, gold always plays an important role. Many prefer to buy gold directly as it is seen to be indispensable for special occasions in life. According to some estimates, the country has 27,000 tons of yellow metal. At present, there is a gradual change in the thinking of investors keeping in view the rapid financialisation of investment instruments.
You can turn investment focus not only on jewellery and coins, but also on Gold ETFs which. These are schemes managed by mutual fund companies. Here the price of a gold ETF unit is adjusted to suit one gram of gold or a fixed amount. Buying and selling in electronic form provides the convenience of easy management.
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There are sometimes doubts about purity when buying gold directly. A gold ETF supports the price of gold with each unit having a purity of 99% or more. So, there is no need to worry about purity. Storage is a big problem when buying gold. Choosing something like a locker will cost you a little extra. There are many other factors such as making charges and depreciation. ETFs have fewer of these problems. Since gold ETF is in demat form, there is no need to worry about security.
Gold ETFs are easy to buy. Units can be bought and sold anytime during the working hours of the stock exchanges. Through SIP, you can invest in it in a phased manner every month without investing a large amount at once. Those who do not have a demat account can choose a gold fund and open a SIP.
One of the main advantages of Gold ETFs is transparency. Despite fluctuations in gold prices, gold units reflect that price. Price can be known easily in buying and selling. It is known that there is a difference in the price when you want to sell gold. Gold ETFs held for more than three years are treated as long-term capital gains. A tax of 20 percent is payable on the profit, adjusted for inflation. Short-term capital gain rules apply if the sale is less than three years. Those who want to include gold in their portfolio can look into gold ETFs. It can be seen as a reliable asset in the wake of economic downturn.
