Gold ETF

What are Gold ETFs?

Gold ETFs (Exchange Traded Funds) are commodity-based funds whose underlying asset is gold. These funds can be traded on the stock exchange with the convenience of an equity share, and their prices typically move according to the gold market.

A Gold ETF’s single unit represents 1 gram of gold and is backed by high‑purity bullion (dematerialised and paper form). An investor can buy a Gold ETF instead of physical gold and could benefit from the rise in gold prices over time. The expense ratio of Gold ETFs is quite low, and it gives a highly liquid and flexible investment alternative.

Who Should Invest in Gold ETFs?

Here is a list of investors who should consider investing in Gold ETFs:

1. Investors With Storage Issues: The investors who cannot or do not want to take delivery of physical gold but wish to benefit from the increase in prices can consider Gold ETFs.
2. Investors With Long-Term Vision: Investors looking to build wealth through long-term investment tenure can choose Gold ETFs for consistent growth.
3. SIP Investors: You can start investing in gold ETFs with some funds offering SIPs as low as ₹100 per month.
4. Cost-Conscious Investors: As the brokerage, entry and exit costs of a Gold ETF are considerably low, any cost-conscious investor can invest in these.

Benefits of Investing in Gold ETFs

Here are the prime benefits of investing in Gold ETFs

1. Convenience: Gold ETFs allow you to enjoy the benefits and convenience generally associated with equity investing. These ETFs are traded like regular securities on exchanges, and the need to visit jewellers or bullion traders is eliminated when you choose Gold ETFs.
2. Zero Entry Exit Loads and Low Brokerage: The brokerage is often 0.5-1% along with zero entry and exit loads, making it an excellent option for investors looking to avoid taxes on buying physical gold (3% GST is saved).
3. Liquidity: As these are traded on the exchanges, they offer intraday liquidity, and investment in small units is also possible.
4. Loan Collateral: Gold ETFs can be used as collateral for secured loans, providing additional flexibility.

The Gold ETF price is tied to physical gold, providing an excellent opportunity for investors to diversify their portfolio, especially when looking for long-term investment.

How to Invest in Gold ETFs?

Here are the steps you can follow to invest in Gold ETFs:

1. Login (or Register): If you have an Upstox account, simply log in or register for a free account.
2. Research for Gold ETF: Once you have logged in, browse and research for the ETF that matches your investment needs.
3. Fund Selection: Select the best Gold ETF in India that suits your needs from a list of ETFs listed on Upstox.
4. Investment Type: You can choose a lump sum or SIP (Systematic Investment Plan) for the fund at your convenience.
5. Make the Payment: Buy in real-time on the exchange using a market or limit order, or via SIP/lump-sum options.