Things to Know About Gold Fund in India
When it comes to gold, India goes crazy and it seems that the country can never have enough of it. However, when it comes to dealing with gold fund in India, an investor should definitely be ready with relevant and adequate information regarding the risks, returns and limitations. India is a country which encourages several traditional and cultural occasions and events, and hence the role played by gold has been significantly dominating since years. Gold funding has recently become one of the most talked about investment options in India and it is important to weigh and analyse the factors which are to be considered before investing in gold fund in India.
To start with, be aware of the different forms of buying gold and assess the respective factors of profitability involved in funding in that particular form. For example, buying gold jewellery may be the most traditional way of investing in gold, but the same can incur loss of around 10-35% through wastage and making charges. Bank coin which is another form of gold funding is also not a good investment idea because of the heavy premium of 5-10% charged by the banks on it.
On the other hand, investing in bullion bars can be considered better; but the minimum investment on the same turns out to be much higher for a common investor. Compared to all these options, Gold Exchange Traded Funds (ETFs) are doing pretty well. These funds are meant for investing in gold and are proving to be a safer and convenient option for the investors. It charges less and allows the investor an electronic access to his gold.
An investor in gold funds should be aware of the fact that any form of god funding does not provide any flow of income to the investor, unless the investor goes for the gold ETFs dividend option.
Gold funding in India is considered to be the best protection against inflation; however, the rate of capital appreciation in gold funding is lesser than the returns acquired from shares and real estate investments. The best part about investing in gold is that the investor can readily reap the benefits of its high cost by selling gold during high inflation and the same has been done by several traditional Indian families to meet their immediate financial goals like marriage, higher education, paying off debts and buying property. This entails the value of gold in terms of liquidity as it can be easily converted into cash by selling the same to jewellery or pawn shops or even banks which can provide a jewellery loan against gold.
Investing in gold does not carry any significant risk as gold does not face any deflation in its real sense. However, the only loss happens in terms of opportunity as the investor misses to put the same amount of fund in other investment options with higher returns.
Source: http://www.squidoo.com/things-to-know-about-gold-fund-in-india
To start with, be aware of the different forms of buying gold and assess the respective factors of profitability involved in funding in that particular form. For example, buying gold jewellery may be the most traditional way of investing in gold, but the same can incur loss of around 10-35% through wastage and making charges. Bank coin which is another form of gold funding is also not a good investment idea because of the heavy premium of 5-10% charged by the banks on it.
On the other hand, investing in bullion bars can be considered better; but the minimum investment on the same turns out to be much higher for a common investor. Compared to all these options, Gold Exchange Traded Funds (ETFs) are doing pretty well. These funds are meant for investing in gold and are proving to be a safer and convenient option for the investors. It charges less and allows the investor an electronic access to his gold.
An investor in gold funds should be aware of the fact that any form of god funding does not provide any flow of income to the investor, unless the investor goes for the gold ETFs dividend option.
Gold funding in India is considered to be the best protection against inflation; however, the rate of capital appreciation in gold funding is lesser than the returns acquired from shares and real estate investments. The best part about investing in gold is that the investor can readily reap the benefits of its high cost by selling gold during high inflation and the same has been done by several traditional Indian families to meet their immediate financial goals like marriage, higher education, paying off debts and buying property. This entails the value of gold in terms of liquidity as it can be easily converted into cash by selling the same to jewellery or pawn shops or even banks which can provide a jewellery loan against gold.
Investing in gold does not carry any significant risk as gold does not face any deflation in its real sense. However, the only loss happens in terms of opportunity as the investor misses to put the same amount of fund in other investment options with higher returns.
Source: http://www.squidoo.com/things-to-know-about-gold-fund-in-india
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