Strategies for Investing in Gold Mutual Funds and ETFs

The passion of Indian people for gold has been known for centuries. Not only does this special yellow metal have a high perceived value, but it also has a strong emotional connection.Gold in form of jewels, gold coins or bars frequently come at a huge price due to its manufacturing costs. For many days, it is also the most common investment products.Trading gold in physical form supports Gold ETFs as security, which means you buy gold at the back-end when you buy a Gold ETF. This gives investors a guarantee of gold purity.

• As the gold price increases, so does the cost of Gold ETFs, and vice versa. As a consequence, it does not compromise on purity and is therefore available across the country at a standard price.
• Because ETFs are related to direct gold prices, the transparency of trade is growing. It is an investment at low risk.

Benefits of Investing in Gold ETFs 

• Easy Trading – To begin with, you just need to buy at least 1 unit of gold, equal to 1 gram of gold, for gold ETF trading. Using a stock broker or fund manager, you can buy and sell it.
• Free Market – As they are public, everybody can keep track of gold prices on the stock exchange. Without any trouble, you can test the gold prices for the day or the hour.
• Simple Transactions – At any time of day when the stock exchange is open, you can trade your gold ETFs.
• Economic – Since there are no entry or exit charges for gold ETFs listed on the stock exchange, you are only required to pay nominal brokerage charges.
• Secure Resource – The prices of gold are not very fluctuating. So even if your stock returns are down, gold ETFs will cover you against huge losses.
• Collateral Security – If you plan to take a loan, your gold ETFs can also be used as collateral security.

How to buy Gold ETF

• First and foremost, with the help of a stockbroker, is to open an online trading and Demat account.
• Then log in to the broker’s website by entering your user ID and password
• You will pick the Gold ETF in which you want to invest in the third step. You can either buy it in a lump sum or through structured SIPs on a regular basis. It also gives you the option of using the underlying gold ETF to choose mutual funds.
• Place a purchase order in the next step to buy a limited number of Gold ETF units.
• You will get a confirmation mail on your email id or phone.
• Using a related savings account, the web application will then debit your bank account with marginal charges.
• You should actively invest in Gold ETFs rather than attempt it on the market, which are more competitive than other gold investments.

To know more about Gold investment, you can visit our website http://www.jayantharde.com or contact our representative at +91 712 2282029

Gold ETF Charges

• The Gold ETF has some related costs. Firstly the expense ratio, about 1 percent lower than other mutual funds, for the management of the account.
• The second is the broker charges to be informed for each time you buy or sell the Gold ETF units
• The third error is the tracking error, but it is not a charge, but has a decisive impact on the returns.
  

Graph 1: Gold ETFs gaining the attention of Indians
Source: indiatimes.com

How much gold is to be allocated?

IFAs may allocate approximately 10-15% of the entire portfolio of their client / investor to gold through a long-term investment horizon Gold ETF.

Gold should play its position as an active diversifier of portfolios, a store of value in economic uncertainty, and a long-term hedge against inflation.

In the long run, this will be an intelligent and sensible investment strategy.

To know more about Gold investment, you can visit our website http://www.jayantharde.com or contact our representative at +91 712 2282029 or meet us at 51, Gurukripa, Old Sneha Nagar, Wardha Road, Nagpur – 440015.