Gold also known as the yellow metal is an asset valued as a safe heaven in the world of investments and it known for acting as a hedge against inflation.
There are different ways to invest in gold in and we need to be aware of all the options before making a decision.
There are different ways to invest in gold in and we need to be aware of all the options before making a decision.
The most popular and oldest way to invest in gold is in the form
of physical gold as this is what most of the people
are comfortable with .
There are two ways that one can invest in physical gold
Jewellery is the most common way of investing in physical gold but it is brought by people for consumption rather than investment.
It is easy to invest in it , all you need to do is use cash or cheque and you can buy it however you do not just pay the market price of gold , but also making charges for jewellery .
When it comes to physical gold, there are chances of theft and fraud as you can be sold a inferior quality of gold in the name of high quality gold.
If a marriage going to be there then people prefer to invest in physical gold or if it will not be required for emergency in short term.
If you do not believe in the online option , that is another reason that you can go for investing in physical gold.
There are two ways that one can invest in physical gold
Jewellery is the most common way of investing in physical gold but it is brought by people for consumption rather than investment.
It is easy to invest in it , all you need to do is use cash or cheque and you can buy it however you do not just pay the market price of gold , but also making charges for jewellery .
When it comes to physical gold, there are chances of theft and fraud as you can be sold a inferior quality of gold in the name of high quality gold.
If a marriage going to be there then people prefer to invest in physical gold or if it will not be required for emergency in short term.
If you do not believe in the online option , that is another reason that you can go for investing in physical gold.
Gold coins and bars are another way to invest in physical form of
gold and they are sold by all the banks and jewelers .
The good thing is that depending on the requirement you can either buy more gold bars and coins and easily available at banks and jewellery shops , but banks only sell it not buy it back.
There is no consumption done on regular basis so a person can keep it in locker or some safe place for a long time.
The disadvantage is that they are available at a premium price of 5-10% and at the time of selling, you will get a discounted price of 5-10% , so overall your returns will decrease.
Gold ETF’s which is an online version of physical gold are just like stocks , you can invest in these if you have a demat account .
It is convenient to invest in Gold ETF if you already have a demat account and can start with a small amount of 1 gm value and as and when you want you can invest from time to time.
However you have to pay the brokerage and you do not get a feel of gold in your hands which you get with physical gold .
The gold ETF can also be converted to cash at times if you have not chosen the right one and there are chances that you will sell then in the time of small emergencies which you will not do with physical gold.
The expectation is liquidity with exposure to gold for investment point and you can buy gold ETF with a demat account.
You can invest and can consider them as liquid as you can sell them in the stock market.
The good thing is that depending on the requirement you can either buy more gold bars and coins and easily available at banks and jewellery shops , but banks only sell it not buy it back.
There is no consumption done on regular basis so a person can keep it in locker or some safe place for a long time.
The disadvantage is that they are available at a premium price of 5-10% and at the time of selling, you will get a discounted price of 5-10% , so overall your returns will decrease.
Gold ETF’s which is an online version of physical gold are just like stocks , you can invest in these if you have a demat account .
It is convenient to invest in Gold ETF if you already have a demat account and can start with a small amount of 1 gm value and as and when you want you can invest from time to time.
However you have to pay the brokerage and you do not get a feel of gold in your hands which you get with physical gold .
The gold ETF can also be converted to cash at times if you have not chosen the right one and there are chances that you will sell then in the time of small emergencies which you will not do with physical gold.
The expectation is liquidity with exposure to gold for investment point and you can buy gold ETF with a demat account.
You can invest and can consider them as liquid as you can sell them in the stock market.
Gold Mutual funds are those mutual funds which invest in another parent mutual fund which are related to gold related activities and buy physical gold , but in very small quantities .
This is not a good investment for those who track gold prices , because these funds do not invest most of their money in gold , but gold related companies .
So its mainly a equity fund which invests in companies which does nothing but invests in its parent mutual fund which finally invests in different companies .
The good part of these funds is that if you are optimistic about the future of those companies involved in gold but you will pay expense ratio two times because it is fund of funds.
These are the mutual funds which invests in real gold, pool in money from people and buy gold and you can buy the units of these mutual funds .
The best part of these funds is that you can invest in gold through SIP route and you do not need to have a demat account to invest in gold saving funds .
You also can invest regularly in gold through SIP through this funds but you pay administrative charges and expense ratio just like any other mutual funds.
This is not a good investment for those who track gold prices , because these funds do not invest most of their money in gold , but gold related companies .
So its mainly a equity fund which invests in companies which does nothing but invests in its parent mutual fund which finally invests in different companies .
The good part of these funds is that if you are optimistic about the future of those companies involved in gold but you will pay expense ratio two times because it is fund of funds.
These are the mutual funds which invests in real gold, pool in money from people and buy gold and you can buy the units of these mutual funds .
The best part of these funds is that you can invest in gold through SIP route and you do not need to have a demat account to invest in gold saving funds .
You also can invest regularly in gold through SIP through this funds but you pay administrative charges and expense ratio just like any other mutual funds.
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