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Earnest

What are the advantages of investing in gold ETF?

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Hi Earnest,

The main reason why you choose to invest is to make a considerable amount of profits. Investing in gold is one way you can make nice profits.  There are many investment options for gold, the popular one for the longest time being the physical gold.
 The introduction of exchange-traded funds has led to the emergence of gold ETF as one of the best investment options for it. From gold ETF being safer to invest in them being highly liquid, these are just some of the significant benefits of investing in gold ETF. However, gold ETFs have their drawbacks that can make you abandon this investment option. 
Gold ETF come in terms of derivatives and contracts. Therefore, you can repossess them only as cash. Also, as the capital gains tax in other ETF is written off, this may not be the case in gold ETF, meaning you will incur an extra cost when you could have invested in other ETF that are tax-efficient. You will incur additional expenses in gold ETF, the maintenance fee for the dematerialized account, and the price for running this account.
You must check how the gold ETF performs before you select it as your investment option. Also, always check on the market risks that come with the gold ETF. Being vigilant and understanding what you will meet in this market will help you make a better strategy on trading the gold ETF.

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Hi Earnest,

Gold exchange-traded funds are typically derived contracts based on the actual price of gold. So
you will not be precisely owning gold bars or coins. This fund is multipurpose since you can use
it to do quite a several actions. You can use it to track the price of gold and gain exposure to the
market shifts. You can also use it if you want to make investments in the gold mining industry or
obtain information about the industry. You can also use it as insurance to your assets if you are
an investor in a foreign country that relies on gold as a source of income.
Apart from having multiple uses, the fund also has other advantages such as the fact that trading
is secure as an investor is required only to buy one unit of gold or more, which is equivalent to 1
gram of gold. Buying and selling these units is similar to equities. Trade is possible through fund
managers or stockbrokers.
This makes transactions easy since you can buy and sell these units from any part of the country
in just a few steps, and the disparity of gold prices because of GSTs will not affect the price.
There is also guaranteed open trade since the price index of gold is available to everyone in
public. Gold ETFs are economical since there is no entry or exit system; therefore, there are no
extra costs, but the only thing you pay is 1 percent of the brokerage fee.
You also enjoy tax benefits since there is no transaction tax or wealth tax applies to this fund.
Unlike real gold, this ETF is a safe option since there is no risk, such as theft, and there are no
storage costs incurred. Gold rates seldom fluctuate so one can use them as insurance for your
assets at risk.

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