In the case of physical gold, there is always a risk of theft at the time of transport or when it is stored. But in the case of Gold ETF, the fund takes care of it. Gold ETFs are backed by gold with a purity of 99.5%, so investors can be sure of the quality of the gold. Gold ETFs are similar to digital gold, reducing the risk and costs of storing gold.
In addition, these funds are more fiscally efficient than physical gold. Therefore, investors who want to invest in gold for a return and protect their portfolio against equities may consider investing in gold ETFs. In addition, gold ETFs track gold prices in real time and are subject to tracking errors. Therefore, investors who want to track their gold investments in real time may consider investing in gold ETFs.
Keeping gold in its physical form at home is fraught with risks. Unlike physical gold, owning gold in the form of an ETF (exchange-traded fund) is much more convenient. Gold ETFs are passively managed and reflect current gold prices without distortion, unlike physical gold prices, which vary across India depending on location and the dynamics of supply and demand. In addition, gold ETFs cost less than buying or selling physical gold.
Chintan Haria, director of product development strategy %26 at ICICI Prudential Mutual Funds, explains how gold ETFs differ from gold mutual funds. The transaction costs associated with gold ETFs are usually lower than the costs associated with buying, storing and insuring physical gold. Investing in gold ETFs is ideal for people who seek gold from an investment point of view rather than using it for jewelry or personal use. Nowadays, you can invest in gold in several ways, such as investing in gold ETFs, gold mutual funds, and buying physical gold at the nearest retailer.
Even if a gold coin is issued with a nominal monetary value, its market value is linked to the value of its fine gold content. Therefore, investors who prefer to make small investments in gold at their convenience can invest in digital gold. Most of the time, the collapse of the stock markets is often accompanied by a rise in gold prices, which explains why gold is compulsorily included in many portfolios as a hedge asset. You don't need a demo account to invest in gold mutual funds, but you do need a demo account for gold ETFs.
Gold exchange-traded funds (ETFs) invest in gold with a purity of 99.50%, while gold funds invest in gold ETFs. A Demat account is mandatory to invest in gold ETFs, while you can invest in gold mutual funds even without a Demat account. Investors who want to invest in gold but cannot afford the high investment or storage costs may consider investing in digital gold. Gold ETFs have no exit charges, while gold mutual funds charge an exit charge when their shares are redeemed within a year.
However, in the case of gold ETFs, the minimum investment amount would be equivalent to the current price of 1 gram of gold. In India, gold is a benchmark investment for most, and every auspicious occasion is characterized by the purchase of gold.