Have you ever wondered how one can invest in gold without owning it?
Why Should you invest in Gold?
- Gold is a hedge against inflation because when inflation increases the value of the currency goes down and Gold metal appreciates against the depreciated currency.
- Gold is highly liquid, one can sell gold anytime as it is scarce in supply and high in demand.
- Gold is a highly effective diversification asset against all the investment avenues.
- Gold is called a “Crisis Commodity” because gold is a safe investment in times of geopolitical uncertainty.
- It is lower volatile compared to other investment avenues.
What are the ways to invest in Gold?
- Physical Gold as an investment can be held in the form of jewelry, coins, bars (bullion), and so on.
- Digital Gold can be purchased in increments of one gram through various apps.
- Sovereign Gold Bonds (SGB) released by RBI which is available to purchase through Banks. These bonds usually come with a lock-in period of 5 years and with a term of 8 years, investors can enjoy capital appreciation and also earn interest every year (2.5% per annum).and it is guaranteed by the Government of India.
- Gold Mutual Funds are managed by various asset management companies (AMCs) that follow a fund of funds structure and primarily invest in Gold ETFs.
- A Gold ETF is an exchange-traded fund (ETF) that aims to track the domestic physical gold price. They are passive investment instruments that are based on gold prices and invest in gold bullion. One Gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity.
Why Invest in Gold ETF??
- Gold ETFs are transparent vehicles that offer small investors an effective and efficient way to diversify into GOLD.
- No worry about impurities.
- Electronically stored data.
- Can monitor the value of your investments in real-time.
- Extremely Liquid as it is listed and traded on the stock exchange.
The point now is: How to Invest in Gold Exchange Traded Funds (ETFs)?
To Invest in Gold ETF, all you need to have is a Demat account and a trading account to invest in gold ETFs.
After having a Demat account Choose the Gold ETF and place the order online from your broker’s trading portal. The orders are routed to the exchange where the purchase order is matched with the sell orders and executed band a confirmation will be sent back to you.
Gold Should be in your portfolio as it is safe haven in uncertain times and help to diversify the risks associated with its other classes of assets.
In recent times, Gold ETFs are one of the effective way to invest in gold as it is easy to buy, trade, and sell one unit of Gold ETFs which is one gram of gold. Gold ETFs are transparent in nature, and have lower expenses compared to physical Gold investments, which solve the storage issue of holding the physical gold and give the tax benefits also.
Association of Mutual Funds in IndiaA Gold ETF is an exchange-traded fund (ETF) that aims to track the domestic physical gold price. They are passive…www.amfiindia.com
2 thoughts on “Have you ever wondered how one can invest in gold without owning it?”
Thank You, Kabir!