All That You Need To Know About Gold ETFs

Gold ETFs are exchange traded funds that track and replicate the movement of gold in the physical markets.

Here is a list of the 10 things you must know about Gold ETFs

1. Gold Exchange Traded Funds are actively traded in the stock markets. Trading in Gold ETFs is similar to buying or selling of shares through a stock exchange (NSE or BSE). This makes them an extremely liquid asset class.

Gold is an attractive asset class

2. A unit of Gold ETF typically is the equivalent of 1 gram of gold in the spot (physical) markets.

3. Gold ETF units are backed by physical gold of very high quality and purity.

4. Your Gold ETF investments are held through your Demat account.

5. Since Gold ETFs are classified as Mutual Fund Schemes, they do not attract any Securities Transaction Tax (STT) or Wealth Tax.

6. Long term capital gains on Gold ETFs (held for a period greater than one year) are taxed at the rate of 10% without indexation and at the rate of 20% with indexation.

7. Buying and selling of Gold Exchange Traded Fund units will attract normal transaction changes (e.g. brokerage)

8. Typically, the Asset Management Company (AMC) promoting the ETF scheme will charge an annual fund management fee.

9. Historically, Gold has been the most resilient of all asset classes – outperforming others during difficult times. They are a must for every portfolio.

10. Gold ETFs are a better investment when compared to buying physical gold in the form of gold coins and jewellery. They are easy to sell (at live market prices) and unlike physical gold do not attract any value added tax. Since Gold ETFs are held through your Demat Account, there are no additional storage costs involved.

Thanks for your time. Happy Investing.


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