Gold ETF - reasons for growing popularity

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You can even invest in gold through a systematic investment plan.

What is a Gold ETF?

Gold ETF, also known as Gold Exchange Traded Fund, is a kind of mutual fund in which the investment is made in assets like gold, instead of cash. These exchanged funds act as individual stocks and are traded like the same on the stock exchange. In the case of Gold ETF, the trade is done in physical gold in the paper form as well as the dematerialized form. Gold ETFs can make your portfolio broad in the investment industry. You can even invest in gold through a systematic investment plan. This is considered an easier way of investment and is simpler to acquire. Gold ETFs are one of the best investment schemes as they are considered equally profitable as bonds and used to secure the investment even in the case of market fluctuations.

What are the benefits of investing in Gold ETFs?

Gold ETFs offer a range of benefits to their investors which is why it is one of the most favourite forms of investment. Here is the list of advantages of the Gold ETFs-

  • Flexibility- You can purchase Gold ETFs online and place them in your Demat account. There is no limitation on entry or exit and your asset management company will be responsible for the trade on a stock exchange. You can also try SIPs I'm gold investment without needing a Demat account and can calculate your preferred annual increase through SIP with Annual Increase Calculator.
  • Long term investment- You can store your Gold ETFs for however long you want as you will not face any issue regarding safety while storing your ETFs in your Demat account. In addition to that, there is no wealth tax on Gold ETFs as well, so there is no need to worry.
  • Easy transactions- Along with trading in the stock exchange, Gold ETFs also are a great substitution for security in case of any secured loans. You don't have to pay any entry or exit amount and transactions take place quicker than other methods.
  • Tax-efficient trade- Gold ETFs is a tax-friendly scheme and the income or return gained through these Gold ETFs are liable to long term capital gains tax only. You do not have to pay any additional tax such as value-added tax, sales tax, wealth tax, etc.

Why is there a rise in Gold ETFs?

There is a massive growth in Gold ETFs from July to September. According to the Association of Mutual Funds in India, it started when the ETFs inflow started rising in August 2021 after the growth of Rs. 61.5 crore in July. Then there was significant growth in the month of September as well, leading to a 14% increase in the category. Overall, this year has seen a surge in folio numbers by 56 per cent.

The rise in the Gold ETFs could be because of the following reasons-

  • The Gold ETFs market is always fluctuating which is why people considered it as a safe instrument of investment.
  • There is a significant rise in the gold price as well which attracted investors towards the ETFs.
  • Gold works as a safe haven for investment, given its diversification and effectiveness even under economic turbulence, which makes investors choose Gold ETFs over other options.

Conclusion

Gold ETFs are considered one of the best forms of investment and can help you earn long term returns. If you are someone who wants to support their income by trading without even having to possess the actual gold, then you must give Gold ETFs a chance. There is always some fluctuation happening in the gold industry that means there is always a chance of gaining profits from the investment. Even if there is some economic disturbance, you will gain some return in the long term.

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