Ten Reasons Why You Should Invest In Gold ETFs

Ten Reasons Why You Should Invest In Gold ETFs

Exchange Traded Funds (ETFs) essentially represent index funds that can be traded in a stock exchange just like usual stocks. A Gold ETF is an exchange traded fund specially designed to track the live market price of gold and can be traded at any time during trading hours on an exchange. It shares a number of features with mutual funds as well as stocks but stands out as a unique product with a number of advantages over physical gold. Basically, every single unit of Gold ETF represents ownership of 1 gram of gold without any need to receive or handle it in physical form.

There are a number of advantages if you choose to invest in Gold ETFs, which include:

  1. A Gold ETF is actually holding gold in its dematerialized form which ensures complete safety of gold and eliminates risks like theft or damage.
  2. Each unit of ETF is backed up by physical gold of highest quality whereas you have to ensure that gold is of high quality when buying physical gold.
  3. With Gold ETFs, you can hold even small quantities of gold without any issues about managing them as is the case with physical gold. However, you need to have Gold ETFs equivalent to 1 kg of gold to be able to redeem it in the form of physical gold.
  4. It offers a tax-efficient way to keep gold which can be traded with great ease on the stock exchange.
  5. When applying for a loan, Gold ETFs are acceptable as collaterals.
  6. As Gold ETFs are classified as mutual funds, it is exempt from Security Transaction Tax (STT) or wealth tax, whereas on physical gold you have to pay these taxes.
  7. Anyone, including individual, corporate or institutional investors can invest in Gold ETFs without any issue.
  8. Gold ETFs offer a high level of liquidity and it is possible to buy or sell them at any point of time during the trading day.
  9. The transaction charges on Gold ETFs are lesser than those on trading of equities and a Fund Management Fee of about 1% is charged by AMCs.
  10. It is cheaper than buying jewellery and gold coins or bars and is easier to sell as compared with jewellery or other forms of physical gold.

In short, Gold ETFs are mutual funds that are listed on stock exchanges and can be bought through any broker. You can open a free account with Ashlar Online and invest in Gold ETFs through us. We also offer expert advice on online trading and help you manage your investments in an intelligent manner to ensure positive returns.