Wondering where you can invest your earnings? Investing in Gold ETFs is a good idea since it offers safety of investment due to its non-volatile prices.
A Gold ETF represents physical gold in paper form or in dematerialized form. One single unit of Gold ETF is equal to one gram of gold, as it is backed by pure physical gold. visit here
Below, we have curated a list of 10 things which you must know before investing in Gold ETFs!
10 Things You Must Know Before Investing In Gold ETFs
It is crucial to understand certain basic things in order to invest in ETFs in India. There are various online investing platforms through which you can invest in Gold ETFs. Choosing an accurate and good online investing platform is highly important to invest in ETFs to ensure a delightful experience during your investment journey.
Here are 10 Things You Must Know Before Investing In Gold ETFs:
- A fund house’s record of performance history is the first thing to consider when purchasing Gold ETFs. The more impressive the historic performance, the more likely the future performance will be.
- An important indicator of gold ETF liquidity is the amount of market activity on the exchange. The chances of high returns are greater when liquidity is high, and actual market activity is bullish.
- It is also essential for everyone to consider the ETF’s tracking error. A good ETF should closely track its underlying index. The lowest tracking error gold ETF is in general recommended for investors.
- Before investing in Gold ETFs, you should understand the applicable taxes. Gold ETFs are considered non-equity assets and are subject to capital gains till three years following redemption. Capital gains on long-term investments are taxed at 20% post indexation advantages have been taken into account. ETFs investing in gold are not deemed to be equity investments. There is no role of the Securities Transaction Tax (STT).
- Gold ETFs do not generate revenues over time. In contrast, they act as hedging instruments during unsteady economic times. The result is that Gold ETFs also do best during economic uncertainties.
- Trading volumes of Gold ETFs do not affect Assets under management (AUM). A gold ETF transaction only involves the transfer of ownership, and the AUM remains unchanged.
- Gold ETFs in India are regulated by SEBI, which backs every unit of gold ETF with a physical gold unit. Physical gold is kept in custody by most gold funds at Scotiabank’s Mumbai and Delhi branches, also known as the Bank of Nova Scotia.
- Physical gold determines the price of Gold ETFs, which increase or decrease in value based on the price of gold.
- Like stock market shares, you can purchase and sell Gold ETFs via a demat account.
- Gold is a good hedge in times of increased global uncertainty.
If you are seeking to hedge portfolios, you might find Gold ETFs a prudent choice. Stock market investment through Gold ETFs can benefit you if you carefully examine every aspect of the investment, including conducting research before making a decision.