What is ETF?
ETF or Exchange-Traded Fund is an investment fund that holds assets such as bonds, stocks or commodities. ETFs are attractive as investments because of tax efficacy, stock-like features and low costs.
What are Gold ETFs?
Gold ETFs are simple investment products that combine the simplicity of gold investments and flexibility of stock investments. Their trading happens in the cash market of National Stock exchange (NSE) and can be sold and bought like any other company stock.
Why to Invest in Gold ETF?
Gold ETF is a transparent carrier and provides an efficient and effective stage for medium to small investors to expand in to gold. Gold is considered as a Global Asset Class and there are several reasons why GOLD ETF is absolutely necessary in a retail investor’s portfolio, and how they are much better than the conventional forms of investing in gold.
- No worry of impurities or adulteration
- Held in Electronic Form
- Able to track your investment values in real time
- Extremely Liquid
The expenditure incurred in selling and buying Gold ETF is much lower than the cost incurred in buying, selling, storing and insuring physical gold.
How to Invest in Gold ETF?
Investing in Gold ETF is quite easy and it’s quite similar to normal investment funds. You can initiate the procedure of investing in gold ETFs by opening an online trading account and a demat account. That’s it!
After you get your account ready, it just boils down to choosing the desired Gold ETF and place the order online from your broker’s trading portal. The broker will charge you for using his trading platform with a marginal fee. The orders are transmitted to the NSE where both the purchase and sell orders are matched and executed. As soon as the process is completed, a confirmation will be sent to you.
Here’s a list of documents that you will need in order to open a trading and demat account:
- PAN card (Mandatory)
- Identity proof
- Address proof
Gold ETFs are great investments as it lets the investors to accumulate gold over a period of time. As it can be bought in small quantities, the investor can plan future requirements such as his child’s education, his/her marriage etc. In addition, there is zero risk of robbery and the investor need not worry about the storing cost in case of physical gold because the units are held in paper form.
When it comes to physical gold, the individual ends up paying more for making charges, but over here there is no extra charge applicable in gold ETFs.