All that glitters is not gold but if you happen to come across one, then my friend; it is the time for some real investment. Buying and selling of gold has been quite a profitable business in India and since the past years, its value has been increasing remarkably. It is indeed a bit cumbersome to store gold at your house or anywhere else but with the introduction of ETFs or gold mutual funds, there had been a gradual rise in the number of people playing with it in the stock market.
Gold mutual funds are primarily those schemes that invest the money collected from the investors in standard gold bullion. In other words, mutual funds are related to the investment by the firms that are indirectly or directly related to mining, distribution or processing of gold. A unit of gold mutual fund is exactly like the shares of a company i.e. one can trade with it in the stock exchange market.
Now the question is that why one should invest in a gold mutual fund.
Well it is simple. Gold is that only commodity which has its price index rising constantly and is expected to rise more in the coming years. This answers all. But apart from this, there are various other factors supporting ETFs .Buying or exchanging of other mutual funds can only occur when the stock market is in motion. However when it comes to gold mutual fund, you can buy it anytime directly from your fund company or your brokerage. However, yes you need to have a demat account in that particular firm. Also the best part about it, unlike with bullion, that there is no need of storage as it availed in a paper form. Further if it is bought without a load, then it is a good news, for you are devoid of any brokerage expenses or sales charges!
Now let’s get up to some of the basics of gold mutual fund investment. Talking about the cost, the price of one unit of ETF is equal to the cost of one gram of gold on the date of allotment. So if the price index doubles or increase after the period of you buying, then you are obviously in a great profit which is generally the case with gold mutual funds.
Nonetheless, there are few points that one should ponder on, while choosing a gold mutual fund. Following are some of the guidelines:
- First, track record of the past performance of the firm. Although it is not a guaranteed, that it would yield the same in the future.
- Is the advantage expenses included?
- Are there any sales charges.
- You are assessed to tax if you buy more than a designated amount of gold.
- Take an account of the experience of the portfolio manager too.
Thus, we see that gold mutual funds are one of the best ways for an investment. It not only promises you better benefits but is also one of the safest way of investing. Gold is one of the most powerful commodity on which an economy of a nation survives. Hence, an investment in gold mutual fund is considered to be good enough.