BUYING gold on the day of Akshaya Tritiya is considered auspicious. So, this year bring home gold either in the form of Gold ETF. Traditionally, your only option when it comes to buying gold was in the physical form. But with the launch of Gold Mutual Funds (Gold Exchange Traded Funds or ETF), you can, now, buy gold in the demat form.Ask two questions before you go shopping:
1. Should I invest in gold?
2. If yes, then which is better -- physical gold or gold ETF?
The answer to the second question is easier, so let's look at that, first.
If your shopping is purely for investment purposes, then Gold ETF scores over physical gold. Here's why.
1. Low cost
When you buy Gold ETF you have to pay only the brokerage charges, which is usually around 0.5 per cent vis-�-vis shelling out between 10 and 20 per cent as premium and/or making charges if you buy physical gold. To store physical gold, you may incur locker and insurance charges. For ETFs, you pay the annual fund management charges of approximately 0.5-1 per cent.
2. Transparency
For ETFs, the rates are pretty transparent as they are linked to international prices. But there's no consistency in gold prices across various jewellers or banks, even within the same city.
3. Purity:
You need not be concerned about the purity of gold in the case of ETFs.
4. Security:
No one can steal your Gold ETF units!
5. Capital Tax Gains:
In case of physical gold, the long term capital gain tax becomes applicable only when the holding period exceeds three years. The limit is one year for Gold ETFs.
6. Wealth Tax:
Physical gold attracts wealth tax whereas Gold ETF is exempt from wealth tax.
7. Convenience:
Call up your broker and your job is done. You don�t need to visit the nearest jeweller with loads of cash.
Also Read: Gold Investment
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