Instead of investing in gold in the form of jewelry, is it good to invest in ETFs? Let’s see.
Is it good to invest in gold in the form of ETFs?
Gold attracts attention from investment perspectives due to its price trend. Despite the rising price, India’s gold consumption is also increasing. Apart from cultural reasons, gold is considered to provide protection to Indian households in times of economic crisis.
In general, gold is also a reason for Indian households to effectively face the crises of international economic stagnation. According to the World Gold Council, it is estimated that there may be gold worth Rs. 220 lakh crore in Indian households.
Future trend
Gold is expected to continue to rise due to various reasons including the international economic environment and geopolitics. Based on the price trend of gold, the question also arises as to what strategy should be followed for investment perspectives.
Since gold helps in expansion, it is emphasized that it can also be 10 to 15 percent in the investment portfolio. It is also taken into account that gold investment has increased by 38 percent last year.
When it comes to gold for investment purposes, it is considered more suitable to invest in paper form than in jewellery. In that regard, gold savings bonds, gold funds and digital gold are alternatives.
Suitable opportunity
With the suspension of new issuances of gold savings bonds, experts believe that gold ETFs are a good opportunity. Gold ETFs, a type of mutual fund, operate based on gold.
These funds, which are based on the price trend of gold, can be traded in the market. According to the regulations of the stock exchange regulator SEBI, gold funds must buy and hold gold as per the London market standard.
The advantages of gold funds are that, like jewellery, there are no processing fees, damages, etc., and they do not need to be kept safe. Moreover, these can be traded in the market through a demat account. They can be easily converted into cash if required. It is also considered a cost-effective way to invest.
Unlike gold jewellery, units of the fund can be purchased in small quantities. Therefore, small investments can be made gradually according to the nature of the investment portfolio and financial goals. Mutual funds also offer the option of investing in a fixed-term investment method called SIP.
SIP helps in hedging against price fluctuations. Investors should consider these aspects while investing in gold.
Author: karthikkvk95
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