Gold Invest

Gold Invest – The Pros and Cons

In the last five years, the gold investment has dramatically grown in all corners of the world. Nowadays, there are lots of factors that stimulate the gold invest by the new pension fund money and by the private investors. Across the different country, the sales in gold are surging while the local economy rapidly booms and the private investment increasingly grows. The gold buyers tend to think of their jewelry as a gold invest.

Gold Invest

You can invest in gold through the gold mutual funds, e-gold, gold ETF’s or in physical gold, like coins and gold bars. Many people also buy the gold jewelry, which they will never use considering them as an investment. Having this in mind, each of these options has their own advantage and disadvantages.

Gold Mutual Funds

This is a mutual fund that is invested in another mutual fund of a parent that is finally invested in the stock gold mining firms, who are related to gold activities.

Pros:

  • Through the Systematic Investment Plan of the gold mutual fund, you can have a disciplined gold invest. You can also invest a little amount of the gold funds.
  • Long-term capital is gaining a tax of 10% without the indexation or a 20% with an indexation that is applied after one year.

Cons:

  • The expense ratio is higher compared to gold ETF.
  • The returns are slightly lower compared to the gold ETF depending on the fund’s performance.

E-Gold

This is launched from the NSEL exchange and has other commodities like platinum and silver in e-format.

Pros:

  • No recurring charge
  • The units are as small as one gram, which can be redeemed for the physical gold
  • Has a greater price transparency

Cons:

  • Has a separate account for trading
  • Not a good way to invest when it comes to tax
  • The commodity exchange is not regulated like the stock exchange

Gold ETF

This is just like stocks because you can invest in this type if you have a demat account

Pros:

  • The units are backed by the corresponding units of the physical golds that are kept in the secured volts
  • The returns are close to the e-gold
  • Long-term capital is gaining a tax of 10% without the indexation or a 20% with an indexation that is applied after one year.

Cons:

  • To buy the gold EFT, you need to have a demat account and trading account.

Physical Gold

This is the used way and the oldest one in the gold invest. This is the form of investment that people are comfortable to deal with. There is a two different way to invest in the physical gold – the jewelry and the gold bar/coin.

Pros:

  • This transaction in this gold invest is easy so it is widely used.
  • You can invest them anywhere

Cons:

  • Bank are charging on physical gold and reselling them can be hard.
  • The storage cost and the making charge are involved.
  • This is the unfavorable way when it comes to tax.

You can go in any of these options if you wish to go for gold invest. See which one suits your needs and go for it.