Thursday, 7 January 2016

Gold ETFs a smart way to invest

Gold exchange traded funds, are designed in a unique way to keep a track on the precious metal. Gold is actually a major commodity on all the stock exchanges around the world, from the New York Stock Exchange to the Bombay Stock Exchange, and even London, Zurich and Paris stock exchanges.

Most gold exchange traded funds, or ETFs,  have different structures that are outlined for them, with a commision of typically 0.4% as trading fees; many even charge annual storage fees as well. Each ETF lets an investor own 1 gm of gold without owning any physically gold. In the United States many brokers for ETFs generally charge only a small amount or a fraction of the actual commision instead of the regular commision. Each share of the ETF covers the annual fund expenses which includes, storage, insurance and also management fees, which is obtained by selling a small fraction of gold, making the value of the gold in each ETF decline with a passing of time. Charges of  sales tax can be avoided with the purchases of ETFs but not on physical gold. For many individuals making an investment in gold is easy and is considered a safe investment when compared to the risks involved in market linked investments, or investment made in products that will get affected by economic, political and even currency fluctuations.

The interest for people to invest in gold has increased, inflation in many countries, declining trends in investment markets, falling of currencies worldwide, social instabilities, and more are some of the reasons why the precious yellow metal has seen such an increase. Making the precious metal a much  more safer option for an investment. Even gold is a speculative market like other commodities, and individuals do need to understand the risks involved. It is advised to have enough knowledge about the precious metal before making your investments.

You can even purchase ETFs online and even learn to trade with it. To buy ETFs online an individual needs to have an online trading account with a broker and you can invest either in a lump sum or using SIP. Trading in ETF is the same as stock trading, buying and selling can happen at any time using the online account depending on the markets being open.