Who should invest in gold ETF Funds?

If you are someone who has recently realized that saving isn’t enough and that you need to start investing as well, you are thinking in the right direction. Financial planning is essential for anyone who wishes to attain financial stability. Individuals have hope, dreams and aspirations in life which they are emotionally attached to. This automatically makes them emotionally connected to their investments as they bank on these investments to help them achieve their life’s monetary goals.

Gold is not just a precious metal for us Indians, it is also a form of investment. People have been investing in gold for several years and this yellow metal is part of Indian customs and traditions as well. However, owning gold these days in physical form has its own demerits. For example, keeping gold in large quantities at home will invite the risk of theft. If you wish to preserve gold in a safety vault, there is a yearly fee that you need to pay. The authenticity of gold is always in question and might differ from one vendor to another. Also the price of 1 gram of gold is bound to differ depending on when you buy it from.

Our love for gold is undying but owning it in physical form has become quite a hassle. Thanks to gold mutual funds, investors seeking investment in gold can now buy gold in digital format without having to worry about it getting stolen.

What are gold ETFs?

A gold ETF (Exchange Traded Fund) is just like any other exchange traded fund which can be bought/sold at the stock exchange. The objective of a gold ETF funds is to track the price of physical gold as its underlying index, with minimal errors. Gold enthusiasts/investors can purchase Gold ETFs close to the actual price of the gold. Of its total assets, a gold ETF invests a minimum of 95 per cent in securities of a particular index (which is being replicated or tracked).

Perks of investing in gold ETFs

Gold funds have gained traction among both new as well as seasoned investors in the past. That’s because investments in gold ETFs are considered to be beneficial in several ways. First of all, investors do not have to remain committed to their gold ETFs. This means that they have the liberty of buying/selling gold ETF units according to their own convenience. Unlike some equity funds that come with a predetermined lock-in period, gold ETFs do not have any such mandates, thus offering liquidity to an investor’s mutual fund portfolio. Like mentioned earlier, because gold funds are owned and traded in digital format. This makes them averse to theft and also maintains the security of the person owning them.

Who should consider investing in gold ETFs?

If you are someone who carries a moderately high risk appetite and is keen on investing in gold digitally, you can consider investing in gold ETFs. However, having a moderately high risk appetite may not be the only criteria for investing in gold ETFs. One needs to also have a long term investment horizon if they wish to seek capital appreciation through these investments. One unit of gold ETF equals one gram of gold. Gold ETFs invest in gold commodities that are supposed to meet international gold standards. The international hallmark category of gold is considered to be 99.5 percent pure. This is why gold ETF holders do not have to worry about the purity or authenticity of gold, and can invest in them without having any trust issues. If these things about gold ETFs attract you and you feel that you should be able to handle the risks that come with these investments, then you may consider investing in gold ETFs.

Another thing investors should consider is their investment objective and see whether it aligns with your investment. For example, if your investment objective is to save taxes, then you should be looking for other investment options like ELSS that offer tax deductions for investments worth Rs. 1.5 lakh per fiscal year.

Those who are considering investments in gold ETF might take a look at Axis Gold ETF. Axis Gold ETF is an open ended scheme replicating/tracking Domestic Price of Gold.

Benefits that Axis Gold ETF offer:

· Invest in gold without the hassles of storage or concerns on quality

· Low cost of holding

· Transparent pricing based on international gold price movements

· Invest in multiples of 1 gram through stock exchange

The investment objective of Axis Gold ETF is to generate returns that are in line with the performance of gold. However there is assurance that the scheme will guarantee returns. Also the past performance of the scheme may or may not reflect on its future performance.

Hence investors are expected to do a thorough background check before investing in any type of fund.

Axis Gold ETF

An open ended scheme replicating/tracking Domestic Price of Gold

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully