The festivals of Dhanteras and Diwali are near. Buying gold on special occasions is considered auspicious. Many people invest money in this on Dhanteras. If you are planning to invest in gold this time on Dhanteras and Diwali and want to get better returns from it, then you can get good returns by changing the way of investing in gold. Apart from physical gold, gold exchange traded funds (ETF) are also a popular option among investors for investing in gold. This can be a better option for investors planning to invest money in gold this Dhanteras. What is gold ETF? What are the benefits of investing in it? Let us know how it works and who should invest.
What is gold etf
The best way to invest in paper gold is to buy gold ETFs. This is an open ended mutual fund, which is based on the rising and falling prices of gold. It is a traded fund which is listed on the stock exchange and its price changes with the price of gold. ETF is very cost-effective.
One gold ETF unit means 1 gram of gold. That too completely pure. It gives the flexibility of investing in stocks along with investing in gold. Buying and selling of Gold ETF can be done on BSE and NSE like shares.
Also read: SBI Mutual Fund: SBI Small Cap Fund becomes powerhouse of returns, more than 7 times return on SIP, lumpsum investment increased by 18 times
Benefits of Gold ETF
- You can buy gold ETF units like shares.
- Purchasing charges are less as compared to physical gold.
- 100% purity is guaranteed.
- There is no hassle of buying and maintaining physical gold.
- Investment also gives good returns in the long term.
- There is facility of investment through SIP.
- Investing in gold ETFs is less volatile than investing in the stock market.
- Since it is in electronic form, there is no problem regarding purity in Gold ETF.
- You can buy Gold ETF online through Demat account.
- High liquidity means you can buy and sell it whenever you want.
- You can also start Gold ETF with 1 gram i.e. 1 Gold ETF.
- In terms of tax, it is cheaper than physical gold. Long term capital gains have to be paid on gold ETFs.
- Gold ETF can also be used as security for taking loan.
- You have to pay making charges on physical gold. But this does not happen in Gold ETF.
How to invest in Gold ETF?
It is necessary to buy at least one unit for investment.
Each unit is of 1 gram.
Purchasing of Gold ETF is like shares.
You can buy gold ETF from your existing trading account only.
The units of Gold ETF are deposited in the demat account.
Gold ETF is sold through trading account only.
Also read: Multi Asset Funds: This Diwali, enhance the shine of your portfolio with multi-asset funds, you can take investment mantras from the puja thali.
