The tradition of buying gold on auspicious occasions like Akshaya Tritiya is a part of the Indian tradition. According to religious beliefs, buying gold on auspicious days will bring them prosperity and good luck. This year, Akshaya Tritiya will be marked on May 3. People buy all forms of gold ranging from coins to jewellery to digital gold.
However, with changing times investors are increasingly opting for Gold ETF over physical gold.
Gold ETF vs physical gold
Chintan Haria, Head – Of product Development & Strategy, ICICI Prudential Mutual Funds said that this is large because Gold ETFs offer some distinct advantages. Here, an investor need not worry about storage, theft as gold units are held in Demat form and lower cost of acquisition given the absence of making charges and other related expenses.
“This Akshaya Tritiya you may buy gold for self or gift it via Gold Exchange Traded Funds or Gold ETF. One unit of a Gold ETF is equivalent to 1 gram of 99.50 gold. These units are in dematerialised form. So the advantage here is that minimum investment is much less than that in case of physical gold – which normally has to be bought of at least 10 grams in case of investment purpose.” Vijay Singhania, Chairman, TradeSmart said.
Advantages of Gold ETF
Vijay Singhania, Chairman, TradeSmart lists out the reasons why an individual should prefer buying Gold ETFs over physical gold.
1) You can buy & sell units online as these units are traded on stock exchanges like shares of companies. So ETFs are as liquid as the physical gold.
2) Gold ETFs have is the price of it is same pan India unlike in case of physical gold, where one may see different prices across cities.
3) When one is purchasing physical gold in form of jewellery, the person may have to pay upto 30% extra in the form of making charges. In case of Gold ETFs, the expense ratio is around 1%, while brokerage is around 0.5%. One also needs to pay 1% wealth tax if the purchased physical gold value exceeds Rs. 30 lakhs. Gold ETF holdings, however, do not attract wealth tax.”