A majority of people today are seeking to invest in gold as gold rates have dropped practically 25 per cent from an all-time higher of Rs 55,922 per 10 grams.
As an investment solution also, gold acts as an helpful diversifier, taking the edge off losses in the course of financial downturns and hard market place circumstances. Experts say this investment solution operates as a strategic asset proving its effectiveness in investors’ portfolios. Hence, professionals recommend gold as an integral component of one’s portfolio, even even though gold rates have dropped 25 per cent from an all-time higher.
In the final couple of years, with Sovereign Gold Bonds (SGBs) the government has been advertising monetary investment into gold. Gold ETFs, along with that, has also been gaining reputation amongst investors as a further investment solution.
Industry professionals say Gold ETFs work for investors who want higher liquidity from their gold investment. Gold ETFs can be purchased by sustaining a Demat account, wherein investors also get the solution to invest in them as SIPs.
Note that gold investment in Sovereign gold bonds comes with the interest element in addition to capital appreciation and other advantages. On the other hand, comparable to physical gold – gold ETFs presents longer tenure with a great return and higher liquidity.
Additionally, professionals say investors need to not just think about the expense ratio of the Gold ETF even though investing. Also aspect in the fund size so that you are supplied great liquidity.
To invest in gold ETFs investors will not have to location numerous bids for investing in it. Gold ETFs need to be bought at the market place value. Also, retain in thoughts that as an investor you need to retain an all round allocation of 15 per cent of your portfolio into gold.
Note that these ETFs attracts quick term capital gains tax if held for significantly less than 3 years. To get the most effective of these gold ETFs professionals recommend investors need to hold them for at least a period of 3 years and more.
At the exact same time, lengthy term capital gains tax is added on these investments if held for a period of more than 3 years, in contrast to Sovereign gold bonds wherein proceeds from the investment does not attract capital gains tax liability on it if held till maturity (8 years term).