Vikas was a working in MNC and is a father of 12 year old daughter. He was worried with the increasing gold prices which are even beating the pace of his other investment returns. He was wondering that at this pace he might not be able to gift any jewellery to his daughter on her marriage. His wife was not agreeing for buying jeweller now and that too in bits and pieces, as the fashion for jewellery designs changes with times.
This is not the case only with Vikas, the constant increase in prices of gold in past few years has made so many people think like them.
However there is a simple solution to this ……Gold ETF
Gold ETF is a electronic way to access the Gold market. The Gold ETF is available in the unit of one gram with an exception of Quantum ETF where it is of half gram. As such, assuming the price of Rs.32000 per 10 gms, one gram unit will cost about Rs. 3200/unit. As such investor may opt for buying 1, 2, 5 or any other number of units every month. What’s more, its hassle free, you can buy /sell Gold ETF like any other share from stock markets.
This type of SIP in Gold ETF not only help in accumulation over a long period of time but also average out the buying price over the variation in the market prices. Buying merely 2 units every month for next five years will end up 120 gms of accumulated gold. The value of that gold will be little less than the price of gold at that time. With little less, I mean, after deduction of fund management charges, which is generally 1% of the asset under management and also the brokerage charged on buying and selling of God ETF.
Also read Comparison of Gold ETF with Physical Gold
There are other reasons also for investing in Gold
- No worry on adulteration
- Gold provides diversification to the portfolio
- Gold is considered as a Global Asset Class
- Gold is used as a Hedge against Inflation
- Gold is considered to be less volatile compared to equities
- Held in Electronic Form
- Store of value
- Extremely Liquid
