The Best Way to Buy Gold as an Investment: A Comprehensive Guide To Buying Gold
You may invest in Gold ETFs or gold funds either online or offline directly with a mutual fund distributor. You can also invest in these funds with the help of a mutual fund distributor. However, you may consider investing in gold funds or gold ETFs through the SIP route.
What are the benefits of buying gold as an investment?
Gold has been one of the most beloved investment avenues for quite some time. It is considered to be a low-risk investment instrument as it tends to maintain its value. Hence, it is suggested to invest in gold as an investment for your long-term goals. Investing in gold as an investment is often considered to be the best way to get the best return on your money.
Moreover, the best thing about investing in gold is that it is widely accepted by all segments of society. Gold is considered a sacred and highly valued metal. One should always remember to invest in physical gold rather than investing in gold ETFs as gold ETFs and gold mutual funds tend to be liquid. There are no issues when it comes to maintaining the gold stored in these funds.
Buying Gold Directly
Direct purchase of gold coins from a bank can be used as an alternative to investing in gold ETFs. You can purchase gold coins of any year from the bank with the help of the gold agent. Gold Coins From Gold Agencies Buying gold coins directly from a gold agency can be quite expensive and takes about 6-7 days to receive in your home or office.
You may also have to pay an extra sum for the transportation charges. Gold ATMs If you have spare cash and do not want to visit a bank, then gold ATMs are the best way to buy gold coins. You can buy gold from an ATM easily and at the most affordable rates.
Gold ETFs
ETFs are investment funds made available by a mutual fund company. An ETF is an equity-based fund. It is classified into various types like gold, silver, and others. The main difference between Gold ETF and Gold Fund is that Gold ETF is a custodian and therefore it has to buy the gold in the open market.
On the other hand, Gold Fund is a distributor and so it buys the gold in the open market itself. The Gold ETF was established by the New York Stock Exchange on November 5, 2004. These funds are a global way to invest in gold and help you hold it in your portfolio.
ETF is basically, a passive investment fund, which is an investment vehicle that tracks the performance of an index, commodity, currency, or the Global Depository Receipt (GDR).
Gold Funds
Here are some of the gold funds that are available in India. 1. Goldman Sachs Gold ETF Gold ETFs are popular investment vehicles with several tax benefits. They are very liquid and therefore popular with investors who wish to invest in gold on a regular basis.
Goldman Sachs Gold ETF offers a low cost of investment, low minimum investment, and high liquidity in their mutual fund portfolios. They charge an annual expense ratio of 0.50% of your investment and you get to invest in gold only through the units of the Gold ETF.
They currently have 11 different gold funds to choose from. 2. SBI Gold ETFs The SBI Gold ETFs have gained a massive 54.4% so far this year and have gained over 68% since the start of the year.
What are the risks associated with investing in gold?
While investing in gold, there are a few things you need to keep in mind, which may negatively impact your investment: Allocations and risk are important As gold is an expensive commodity and you will not be able to buy it at a cheap rate if you are an individual investor.
Most of the high net worth individuals do not invest in gold as a means of investment, as it is expensive and you will not be able to buy it at a cheaper rate. In addition, this investment can get expensive if the prices go up. It will also hamper your net worth.
If you are a trader, investing in Gold ETFs or Gold ETFs through an online platform can be risky. The performance of gold ETFs and gold funds through online platforms can vary a lot, due to numerous factors.
Conclusion
You should invest in gold
as an asset class only if you are convinced that you will be able to hold on to
it for many years and in case you understand the intricacies and its risks
well. It should be a part of your overall financial plan.