Golden Investment: Invest in Gold Without Security Threat; Know Why Gold ETFs are A Good Investment And How You Can Do It?

by Shatakshi Gupta

With the fall in the price of gold, investment in gold has started growing once again. In the month of September, an investment of Rs 446 crore has come in Gold Exchange Traded Funds (Gold ETFs).  According to the data of the Association of Mutual Funds in India (AMFI), a total investment of Rs 3,515 crore has come in gold ETFs during the first 9 months of 2021. The same data also suggests that the number of folios in this category has also increased. The number of folios increased to 24.6 lakh in September from 21.46 lakh in the previous month. The number of folios has increased by 56% so far this year. Seeing this growing trend, we will tell you about Gold ETFs and whether you should invest in them or not?

What are Gold ETFs?

Exchange-traded funds are mutual funds listed on stock exchanges. Their trading is also done like the shares listed on the stock exchanges. ETF copies only one index and tries to accurately reflect its performance. They can also be bought and sold during market hours on a real-time basis at current market prices. Originally ETFs only tracked the market, but in recent years they have been tracking various asset classes as well.In addition to the returns, the effectiveness of the system is also measured through the error in tracking.

Gold ETF stands for Gold Exchange Traded Fund. It is traded in all the major stock exchanges. Buying it is like buying shares on the stock exchange. Gold ETF funds buy and store physical gold on a large scale. It is held with ETFs and shares are offered to investors in return for their investment. Gold ETFs are for those investors who want to earn profits on the changing gold prices. In this, investors can buy as many units as they want. Unlike buying gold, there are no other charges like making charges etc. In this, the investor can enter and exit according to his convenience, which is not possible in physical gold.

Also read:What You Need To Know About Gold Investments

Benefits of Gold ETFs

  • Your purchased ETFs remain in the Demat account. So there is no worry about keeping the precious metal safe.
  • On the purchase of gold from jewellers, there is always a doubt about its purity, but it is not the case with these ETFs.
  • One unit of ETF is equal to one gram of gold.  Therefore, investment can be started in this even at a very small level.
  • It is bought and sold at wholesale price with good liquidity.
  •   Gold ETFs can be bought and sold on BSE and NSE just like stocks. 

Is it the right time to invest?

Gold is considered to be the safest investment because of volatility in the stock market. However,the yellow metal has been a medium of investment since ancient times and still hasn’t lost its shine as an investment. However, in today’s era, the safety of gold is also a matter of concern. In such a situation, if you want to invest in gold only and want to be free from the worry of security, then the best way is to invest in gold ETFs.

Currently, the gold is at 48 thousand. Gold will get support in the coming times due to rising inflation and the festive season. With this, gold can go up to 50 thousand again till Diwali. Moreover, if you look at the past trend Gold prices always increase. So, in this case, Gold ETFs are both long and short term profitable investments.

How one can invest in it?

To buy gold ETFs, you need to open a Demat account through your broker. In this, you can buy units of Gold ETF available on NSE and the equivalent amount will be deducted from the bank account linked to your Demat account. Gold ETFs get deposited in your account two days after placing the order in your Demat account. Gold ETFs are sold through the same trading account.

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