ETF is an unimaginable investment option for gold investors. Here is the question What Is Gold ETF? In everyone’s mind.
ETF transforms the way, how to invest in the Market on gold. Without hesitation, without any tension, and without any fund management can directly invest in the market through this process.
India is a gold laving nation country. In this country, South Indians consume more gold. Moreover, in most of the traditional rituals, gold is more important. For purpose of a gift, it’s important also.
Because it has traditional value and financial safe also. Investing in Gold is always called Safe.
What is Gold ETF full form?
There are five processes to invest in Yellow Precious Metal in the market.
1> Through Physical Gold.
2> Through Digital Gold.
3> (ETF) through Exchange Trade Fund.
4> (Gold MF) through Gold Mutual Fund.
5> (SGB) through Sovereign Gold Bond.
Gold is a darling, not only for ladies but it is for investors also. ETF can play a great investment process, I will show how it is, through some points.
. Risk-There are two risks involved when we buy gold.
A>Risk of Purity
When we buy precious metals, there is always a doubt about the purity of the gold, although the symbol of purity is in the jewelry.
B> Risk of Theft
Where to store physical gold It’s a matter of hassle. Fear of theft if kept at home and handling charges have to pay if kept at the bank Custody. Because safety is the first important for all precious metals. Freedom comes from a hassle after investing in ETF Gold. Moreover, we get 100% pure gold and there is no fear of theft. Because all our booked metal (Demat) dematerialized form.
. Long Term Returns.
ETF investments are very successful and always been the best. Because for long term investment, this process comes with periodic returns.
. Flexibility-
If you invest in this process, you will get flexibility in your own way. After opening a Demat account, you can book gold in this fund whenever you want. You need to book a minimum of 1 unit gold and a maximum as much as you like. You can invest in this fund in two ways. Through SIP lumpsum or direct from online.
. No Lock-in Period.
In case of any emergency, if you want to sell Gold, you can do it effortlessly. ETF funds provide this facility. If your fund in profit, then you have to make short-term capital gain tax payments in the Income-tax pay regulation system.
. Easy in Transfer
It looks very smooth to invest in ETF Gold. Because if you buy Physical Gold, then carrying it is very complex. It should keep in a safe place. It’s lots of complexity. If you want to buy gold without Hashes, then you must invest in Gold ETF. Because there is no physical gold here. The whole thing is in the Demat account. You will not be able to get physical gold until it is 1 kg.
Gold ETF vs Physical Gold
When we want to invest in the commodity market, first of all, think about Gold as an investment. But where to invest in physical gold or gold ETFs. First of all, we should know about some information on Gold ETF vs Physical Gold.
These two investment processes have different advantages and disadvantages, that is what we will know here.
| Gold ETF | Physical Gold | |
| Definition | Exchange Traded Fund. Its value is always recorded depending on the value of the open bullion market. There is no doubt about purity. | Anyone can buy real gold on their own, but there is no complete guarantee of the purity of gold (99.5% or not). |
| GST | No GST has to be paid at the time of purchase of this fund. | You have to pay 3% GST when buying Physical Gold, but there is no GST claim when selling Gold bar or Coin on an individual level. |
| Liquidity | This fund can sell units whenever it wants but sometimes it is difficult in our country because ETF is not properly marketed. | This metal could sell at any moment. As needed. |
| Minimum Investment | It is compulsory to book a minimum of 1 gram in this fund. | Hear, you can buy a minimum of 0.5gm to 1gram in this fund. |
| Delivery | In this fund, you could able to withdraw metal after you have acquired one kilogram. | In this case, you can withdraw the same amount of gold as you buy immediately. |
| Loan Availability | No loan is possible in this case. | In this case, the loan is only available if you have a metal bar or coin. It should weigh up to 50 grams. |
| Custody | Here all the metal is in the form of a Demat Account with a Bank. So that’s why no risk factor obtained. | Custody in physical gold has many risk factors. |
| How to Buy | Invest in ETFs is only through a Demat account. Zerodha, Upstax, and others. | you can buy from a Dealer, Jewellers or Bank. |
| SIP | ETF investment is not possible through SIP. | In this case, you have to buy direct metal from the market, there is no SIP system |
| Cost | International prices apply for this investment. Which is completely transparent. You can do transactions anywhere in the country. | Here, the price of Precious Metal may change from store to store. When the city change, the price of gold changes. |
| Extra Cost | In this case, 3% of GST will apply. After which return is available. Besides, a 0.5% handling cost will calculate. Which is negligible | When you buy ornaments, pay the price of gold and 20% to 30% extra as mandatory wages. GST applies separately at 3%. |
| Wealth tax | Wealth tax does not apply in this case. | When a person sells gold and its value is more than 30 lakhs, 1% wealth tax is applicable. |
| Short-Term Capital gains tax | The income tax slab system is applicable to short term capital gain tax if you want to sell within 3 years. | If you sell physical gold within 3 years after purchase, As Per the income tax slab system short term capital gain tax is applicable |
| Long-Term Capital gains tax | If you sell gold with profit after 3 years, then 20% tax is applicable as Long-Term Capital gain tax index. | Same as hear also |
ETF Gold is Transparent. If the as long term of investment, the only unparalleled investment way. If money has invested here, wealth tax is not applicable. And no wage waste is applicable. So the investment is a golden option here
Conclusions
What is Gold Etf? If you want to know this, you should know about many more bonds. But you can learn about the depth of all things. Gold ETF is a fancy investment method in today’s modern age, Whose trends are slowly going high. Although its prevalent in western countries, and has been present for a long time. But in our country, it is still progressive. So this topic needs marketing in a special way.