There are several ways to invest in gold. Investors either prefer buying the metal itself or choosing options such as buying gold funds and buying gold futures. A Gold ETF tracks the value of domestic physical gold. It is a type of exchange-traded fund. These funds are a passive investment instrument that is associated with gold prices and invests in gold bullion. In India, gold is generally maintained in ornament form, which carries a different making and wastage factor (sometimes higher than 10% of bill value). When investing in a Gold Fund, this option is excluded.
When you purchase gold ETFs, you are purchasing gold in an electronic form. Just like how you would trade in stocks, you can buy and sell gold ETFs. When you redeem Gold ETF, you don’t receive physical gold but receive the cash equivalent. A DEMAT account and a broker helps in trading of gold ETFs and it makes an exceptionally convenient manner of investing in gold, electronically.
Also, there is complete transparency on the properties of a Gold ETF. Besides, ETFs have much lower expenses in comparison with physical gold investments.
Investors interested in a more liquid and low-cost entry for investing in gold can avoid the hassles of owning a physical gold such as the cost of storage, insurance, transaction fees and so on. They can consider exchange-traded funds as an option.
Mutual Fund Returns
The most popular question asked by novice investors is ‘What Returns will I get?’. It is like asking, ‘At what pace can vehicles move?’. The answer differs from types of vehicles to roads. Hence, it’s not viable to arrive at an average conclusion or a fixed rate for mutual fund returns.
Several vehicles run at peculiar speeds. We recognize that some vehicles are just for driving while some are for racing. Most individuals are oblivious that there are a variety of Mutual Funds available for different financial goals and needs. They are quickly available, but you need to first conclude the amount of money you plan on investing on a monthly or a quarterly basis or even a lump sum. Timing is fundamental in planning your mutual fund investments. Your investment returns could vary from various categories. A certain class of funds has a greater level of uncertainty in performance. Hence, identifying your financial goal, aim, time horizon, the amount you’re planning to invest, and risk-taking abilities are the most critical factors before you choose a fund.
Mutual funds require a bit of understanding and knowledge; however, this is merely referring to your financial goals. Financial advisors and mutual funds distributors play a significant role in determining what funds are the best fit for your goals. Majority of individuals have trusted portfolio managers who deal with their investments, and they charge a small amount. But you must also know, you can only expect higher returns when you are prepared to take higher risks. In simple words, a liquid fund would reveal far low uncertainty compared to an equity fund. The frequent advice for an investor is to focus on the attributes of the fund and check if it suits their own needs.
Majority of individuals have trusted portfolio managers who deal with their investments, and they charge a small amount. But you must also know, you can only expect higher returns when you are prepared to take higher risks. In simple words, a liquid fund would reveal far low uncertainty compared to an equity fund. The frequent advice for an investor is to focus on the attributes of the fund and check if it suits their own needs.