Indians’ love for gold is not a surprising fact. For long, it has been one of our go-to investment products. People own gold in many physical forms like jewelry, gold coins, or gold bars. There is also another form of gold, which is owning gold in paper form. That is the gold ETF. It comes at a price closer to the original price of gold. A gold ETF, or exchange-traded fund, maybe a commodity ETF that consists of just one principal asset: gold. It is cost-effective when compared to gold jewelry because there are no making charges.
Exchange-traded funds act like individual stocks, and they trade on an exchange in the same manner. So, if you invest in a gold ETF, you won’t own any gold. Even once you redeem a gold ETF, you will not receive the valuable metal in any form. Instead of this, you will receive cash as an investor.
How to Invest in Gold ETFs
Gold is considered as the best investment. It is always good to invest in Gold ETFs. People can make profits as the price rises steadily every day. These are some tips on how to invest in gold ETFs:
Gold ETFs are more profitable than other gold-based investments if you propose to take a position in large sums, or enjoy regular trade.
Since gold ETFs come with brokerage or commission charges of 0.5 to 1 percent, shop around the ETF market a bit to find a stockbroker/fund manager whose charges are low.
Do not choose a gold ETF product or fund manager who supports low fees alone. Look at the fund’s performance over the last few years to get a clear idea of how well the fund managers handle the accounts.
Keep an eye on the gold price trends before you start transacting. Just like with stocks, you’ll want to shop for gold ETFs at low prices and sell them as prices go up.
If your gold ETF is managed by a fund manager, keep an eye fixed on your account, and therefore the trades being finished. Regular monitoring can help you improve the performance of your portfolio.
Gold is best as a brief to medium-term investment, as long-term returns on the alpha-beta brass are often as low as 10 percent once a year.
Do not make long-term investments in gold. Allotting 5 percent to 10 percent of your investment portfolio to gold ETFs is a wise idea. This will also help keep your portfolio robust and the returns stable.
Inexpensive: It is cost-effective when compared to gold jewelry because there are no making charges.
Secure investment: Gold ETFs are the best investment compared to physical gold. This is because there won’t be any concerns over theft or secure storage. No need to pay for any locker charges or making charges.
Safe asset: We don’t observe much fluctuations in gold prices. Even if your returns on the investment decreases, this gold ETFs will avoid the chances of big losses.