In current times, common investors are in dilemma where to park their surplus fund as for them tracking a particular stock or index is very tough as it involves various technical & analysis tools.
Other traditional safe investment options are Fixed Deposit (FD) with Bank, Post office savings etc. Which gives very low rate of returns and FDs also attract tax liability at the time of redemption.
Question arises here is where to invest to earn better than traditional products and that too with safety.
Answer to above is that, start investing in GOLD ETF.
What is a Gold ETFs ? Is it equity? Index? Many such questions will be arising in your mind right now.
To make it very simple, we can explain, Gold ETF as dematerialised / electronic form of physical gold. One unit of gold represents one gram of pure gold.They are traded on both exchanges namely, BSE and NSE and it can be bought as you buy normal equity (stock) of any listed companies. You need not open any separate account to buy Gold ETF.
Why to Invest in Gold ETF:
Ease of investing & selling :
One can buy / sell Gold ETF on a click of button, sitting at his home/office through desktop/laptop/mobile and also through trading terminal of its registered sub-brokers (franchisee of a main member) or branch of any main member of both stock exchanges.
Safe and Secure :
When you buy physical gold, main worry is about its storage. Either you keep it in locker of a bank and pay rent and every time you buy, go and put into it, or keep at home and keep worrying about theft. But Gold ETF is 100% electronic version and fully secured from any kind of theft. You just buy it and relax, no worry of going to banks or theft from your home storage. It is safe and secured in dematerialized form in your Demat Account (click here to open demat account with Sunflower Broking)
Save on making charges of physical Gold :
When you are buying gold jewellery, on an average paying 8-10% as making charges depending on jewellers / brand. Even when you go to sell it, making charges will be deducted once again and net amount will be paid to you. Therefore in total you are spending somewhere between 15-20% as making charges. Whereas in Gold ETF transaction charges are very less, 0.25% maximum, which is transparent and uniform across India as it is traded through common exchange platform.
How to maximise returns :
To maximise returns through investment in GOLD ETF, one should follow, Systematic Investment Plan (commonly known as SIP). For example, investor can fix that every month he/she will buy one gram of gold on advice of his broker/financial planner to buy at which rate. If investment is done in such manner, one can easily earn returns of 12-15% without any hassle. (subject to fluctuation of gold price)
• Investment in Gold ETF is free from wealth tax.
• Long term capital gain is 10% without indexation and 20% with indexation
• There is no STT (Securities Transaction Tax) on it
Our view is that one should opt for investment in Gold ETF as an option of investing in physical gold.
We end this article with declaration that views expressed over here are of personal capacity of author and not of Sunflower Broking as a company. Investments & returns in this instruments are subject to fluctuations in gold prices.
One should take advice of his/her financial planner before making investment in any financial instruments linked to the market.