If the purpose of buying gold is an investment for future gains, then buying gold exchange traded fund is better than buying actual gold bars or ornaments. If you are wondering what is gold ETF , read Four answers to simplify what is Gold ETF !The gains , whether in gold or Gold ETF happens when the price of gold goes up. But there are certain advantages attached to Gold ETF which is not with the physical gold. So , here are the seven benefits of trading through Gold ETFs
In case of Gold ETF , the tax benefits are much greater than the physical gold. The benefits are as under
- There is no wealth tax on Gold ETF whereas Gold in physical form is wealth and as such counted for your wealth tax liability.
- Gold ETF become long term asset within a year whereas physical gold becomes long term asset in three years . Therefore, just after one year , two kinds of benefit are available to GoldETF – one low tax rate of 20 % and benefit of exemption u/s 54F and 54EC.
For better understanding of benefits of taxation on Gold ETF in comparison to actual gold investment , read Three tax advantages GoldETF has over invetment in physical Gold !
When you buy physical gold, you are always having the fear of losing it because of stealing or dacoity. Therefore, people approach banks for locker.
In case of Gold ETF , no such risk is felt because the units representing gold is credited in your demat account and the fund manager are responsible for the gold which is bought on your behalf. Over all cost of safe keeping and maintenance is also very low and actually much lower than buying, storing and insuring physical gold
Unlike physical gold, buying and selling of Gold ETF is very easy as it is done online in a very transparent manner. The statement of account which you get monthly from the ETF managers are also very convenient in comparison to physical buy and sell.In fact for buying and selling , you do not have to go out any where as you can do the trade , as yiu do in case of shares, from your house only. Can be bought and sold in small quantities – as low as 1 unit (equivalent to 1 gram of gold)
The Gold ETFs are listed on NSE stock exchange. At present there are 10 Gold ETF are traded on stock exchange. Therefore,unlike jewellery or coins/bars, ETF units can be liquidated easily to benefit from rise in price of gold. Think , you want to sell 2 kgs of gold in physical form, how much difficulty you may have to approach different jewellers . In case of ETF , you just log in to your broking account and sell on exchange . The NSE market is very big so selling is not difficult. It is hassle free and very fast.