Besides just being a preferred metal for jewellery, Gold is also a good option for investment, taking into account the fact that the prices of gold have been skyrocketing with time. But, buying gold physically is risky as well as expensive, taking into account the number of charges inclined to be applied to it. That makes us think if buying gold
physically is really a smart way of investing?
The smarter way to invest in gold comes in the form of Gold ETFs, which is not just a safer way of investing, but also more convenient, inexpensive and can foster the same returns for you as the traditional method does.
WHAT IS ETF?
ETF or Exchange Traded Funds are similar to mutual funds but can be valued throughout the day while the market is open, unlike mutual funds that can only be valued at the end of the day. Due to this, the earned dividends can be reinvested immediately throughout the day, avoiding the loss of any money. This is different from mutual funds, which are subjected to timelines for re-investing. ETFs are smarter investment option for investors with limited funds too since their prices are often less than their values.
WHAT ARE GOLD ETFs?
Gold ETFs are ETFs, whose prices fluctuate according to the cost of gold. Gold ETFs can be bought & sold easily at stock exchanges. These are open-ended mutual fund schemes that let you invest in standard gold bullion of 99.5% purity. They are less volatile funds compared to equities and get you greater profits in the long run. Gold
ETFs let you own gold in the virtual form. Gold ETFs can be bought in the form of units, wherein each unit of a Gold ETF is equal to the value of a single gram of gold. Gold ETFs can be traded on stock exchanges like any other stocks at any time.
WHY CHOOSE GOLD ETFs OVER TRADITIONAL GOLD BUYING?
● Liquidity
Gold ETFs prove to be more liquid compared to buying gold physically in the form of bars or ornaments. It can be exchanged on the stock exchange anytime with Kristal. Due to its direct gold pricing, there is transparency on the holdings of these ETFs.
● It charges less
Investing through Gold ETFs charges you lesser compared to buying gold physically. A number of charges are levied on gold when bought physically.
These include,
– Making charges
If you buy gold in the form of ornaments, you will have to endure hefty making charges up to 300 Rs. per gram.
– Taxes
GST of 3% is levied on gold when bought physically along with Wealth Tax if the valuation is more than 30 lakh.
– Storage charges
In case you rent a bank locker to safeguard your gold, the storage charges will be further added on the expenses.
But, when buying gold through ETFs you are freed from all the above-mentioned charges since the gold is bought in the virtual form. The only charges applicable on Gold ETFs are generally of three types. These include
– The expense ratio
It is charged for managing the fund and is usually not more than 1%. It is lower than that for mutual funds.
– The brokering cost
If you are investing with Kristal, this will be very minimum & is charged every time you buy or sell gold units.
– The tracking error
It is not technically a charge, but rather impacts returns & is not mandatory. It arises due to the fund’s expense & cash holdings.
All these charges combined are still much less compared to buying gold physically & not to mention, the risk is less.
The better option for long term investment
Investing in Gold ETFs gives you the same returns as you would gain on buying gold physically. But more importantly, it tapers the risk associated with gold as you no longer have to worry about it being lost or stolen. If you are looking for investing in gold for the long term, ETF is always preferable.
Ease of Investing
When buying gold, it can be tricky for you if you wish to buy a single gram of gold, isn’t it? But with Gold ETF, you can do that as well. Gold ETFs can be traded in small denominations, which is an additional benefit, considering that it allows you to virtually buy 1 gram of gold as 1 Gold ETF unit. Gold ETF is also seen as currency very often while trading. This further contributes to making investing easier with Gold ETFs. Also, ETFs can be traded anytime, as long as the stock exchange is open.
WHAT IS KRISTAL & HOW TO INVEST IN GOLD ETF WITH KRISTAL?
Kristal provides you with an overseas USD Brokerage account which helps you buy and sell portfolios with investments in (non-complex) ETFs only. Portfolios are nothing but a bunch of stocks known as Kristals selected by the Kristal AI team. These Kristals are ranked by the Artificial intelligence algorithm of the Kristal team. Kristal lets you access
to 100+ global exchanges for trading. They have an advanced Advisory AI-based Algorithm for portfolio selection and monitoring. With 120+ years of advisory experience, the management of the company is strong with a good track record.
Kristal provides a safe & secure trading platform for you that allows you to invest in Gold ETFs. All you have to do is create an account on Kristal & complete your KYC and you are ready to invest. Kristal designs a good portfolio for you & also monitors & rebalances it according to the market’s needs. With the multi-currency account, you can invest with any currency & do a Forex conversion at a very competitive rate. Thus, you can efficiently and effortlessly diversify your investment portfolio.
With their systematic investment process on Kristal, you get a compelling portfolio management system, using quantitative modules. Besides this, to invest in ETFs with Kristal you don’t need a separate account as you can do it with your Kristal.ai account. Kristal helps you choose the right gold ETF according to your needs. Kristal provides a gateway to more than 2000 ETFs across the globe, bringing the Intelligence in Intelligent Investing. You should start investing too with Kristal.ai.
WHY KRISTAL?
Kristal was founded by Asheesh Chanda, who has over 15 years of work experience behind him in the FInance Industry. Owing to his & his co-founder Vineeth Narsimhan’s rigorous hard work over the years, Kristal has become a recipient of multiple awards, accolades & a widespread recognition across the three countries it is operational in, viz. India, Hong Kong & Singapore.
A team of impeccable financial advisors, researchers, and market experts work consistently to provide their consumers with a holistic approach for their need. For all their consumers spread across 22 countries, they provide nothing but the best advice, aiming to become better & better with time & constant innovation. For all the investors working with Kristal, they strove to provide the best investment strategies, in a way to build a community of portfolio managers, affiliated partners & investors.
GOLD IN A WAY TO HEDGE INFLATION
Professional managers have always believed gold to be a more suitable option for hedging inflation. The reason for this being the fact that the price of gold in the USD is variable. In the case of inflation, as the USD will lose its value, as a result of it, gold prices will rise. So as the value of the dollar depreciates, the value of gold will further increase, making the owner of this gold safe to the effects of Inflation.
TAXATION
When buying Gold ETFs, they are ideally considered as non-equity investments & taxed likewise. For units held for less than 36 months, the short term capital gains are added to the investor’s income & taxed as per the then applicable slab-rate. But for units held for more than 36 months, the long term capital gains after providing for indexation are taxed at 20%.
CONCLUSION
Looking at the present day scenario, Gold ETFs are a smart investment in the gold market. With Kristal, it is convenient, easy, time-saving as well as profitable. It is in all aspects a better choice over traditional gold investment and Kristal provides a platform for you to invest in Gold ETFs easily. So start investing with Kristal today with ease, security & convenience. All you have to do is click on the link & get started.
P.S This post was contributed by Ashish Chanda, who heads Kristal.ai.