Should you buy actual gold or a Gold ETF on May 3rd, Akshaya Tritiya?

  • May 2, 2022, 12:31 p.m.

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 or theft as gold units are held in Demat form and the lower cost of acquisition given the absence of making charges and other related expenses.

This Akshaya Tritiya you may buy gold for yourself 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 the minimum investment is much less than that in the case of physical gold, which normally has to be bought at at least 10 grams for investment purposes. " Vijay Singhania, Chairman, TradeSmart, said

Advantages of Gold ETF

Vijay Singhania, Chairman, TradeSmart, lists out the reasons why an individual should prefer to buy gold ETFs over physical gold.

1) You can buy and sell units online as these units are traded on stock exchanges like shares of companies. So, ETFs are as liquid as physical gold.

2) Gold ETFs have the same price across India, unlike in the case of physical gold, where one may see different prices across cities.

3) When one is purchasing physical gold in the form of jewellery, the person may have to pay up to 30% extra in the form of making charges. In the case of gold ETFs, the expense ratio is around 1%, while brokerage is around 0.5%. One also needs to pay a 1% wealth tax if the purchased physical gold value exceeds Rs. 30 lakhs. Gold ETF holdings, however, do not attract wealth tax. "

Author : Rajdhani Delhi Representative

Rajdhani delhi representative

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