Why should you invest in Gold Etf’s this Akshaya Tritiya?
Akshaya Tritiya falls on the 7th of May 2019. There is always a mad scramble at the Gold shops during the days preceding to it. Buying gold in any form is considered auspicious on this day by most Indians hence the rush.
According to the economic times, the physical gold consumption in India over the last 10 years has averaged out to be 838 tonnes. These numbers are jaw-dropping, isn’t it?
But why do Indians bank on physical gold so heavily?
Gold is a liquid asset that can be converted to cash anytime. It is also a status symbol for most families. Year on Year gold has a good return on investment. Thus, Gold is looked as an investment product that is a strong hedge against inflation and provides peace of mind against the vagaries of other wealth creation products in your portfolio.
So for all important occasions in a person’s, life Gold is the most prominent gift given. Gifting gold has been a form of showering love on your loved ones, especially during special occasions like birthdays, marriages, Anniversaries or during big festivals like Diwali, Eid, and Christmas.
Why should you look at alternatives to physical gold?
While gold is a great idea to gift, it is not an inexpensive proposition. Gold prices are at an all-time high and they have been on the rise for the last few decades.
Because of this constant price rise, in most cases, we are constrained on the final product we buy. Either the Jewellery is too big which makes our budget go out of whack or it is too small which makes the gifting process meaningless.
There are issues of storage after gifting. Most of the time the Jewellery goes straight to the Bank locker with very limited usage. This leads us to the question – While the idea of gifting gold is great, are there better ways to gift gold to your dear ones? Is there a way you can buy gold in small quantities over time and still be able to deliver a meaningful gift to your loved ones. All this, without compromising on quality and paying extra on making charges, wastage, etc. which are additional charges the Jeweller charges you as a matter of fact!
Yes, my friend! There is an answer and that is Gold ETFs.
What are Gold ETF’s?
ETF’s are Exchange-traded funds and they act like Individual stocks. So, if you invest in a gold ETF you will not hold any physical gold even if you redeem one. So you as an investor will receive the cash equivalent of it. Shares of a gold ETF hold a direct relationship with the price of gold.
Gold ETF’s are fairly liquid, it means they can easily be sold. Additionally, theft is not a matter of concern in the case of Gold ETF’s and you do not incur storage or bank locker charges over the years.
When the need arises, one can encash the Gold ETF to physical gold.
How to invest in Gold ETF?
To invest in Gold ETF all you need is a Demat account and a trading account with an online account for trading stock. Once you have the account ready it is a matter of choosing the gold ETF and placing the order.
The documents required to obtain a Demat account and a trading account are :
- Pan Card
- Address proof
- Identity proof
Gold Exchange Traded Funds (ETFs) are being traded in India since March 2007.
In the 12 years since the gold ETFs began trading in Indian stock exchanges, many financial firms have begun offering gold ETF schemes.
The following 13 gold ETF schemes are available in India:
- Birla Sun Life Gold ETF
- Goldman Sachs Gold ETF
- Religare Invesco Gold ETF
- Quantum Gold Fund
- SBI Gold ETF
- IDBI Gold ETF
- R*Shares Gold ETF
- Axis Gold ETF
- Kotak Gold ETF
- ICICI Prudential Gold ETF
- UTI Gold ETF
- HDFC Gold ETF
- Can Gold ETF
I hope this blog helped you to look at the gold ETF’s like a great gift option and gave you some insights on how to procure and gift gold ETF’s to your dear ones to make your occasions extra special. I would love to hear from you about your thoughts and if there are any other questions you want me to research for you.