Gold funds vs physical gold

Gold InvestmentsWhile the economy continues to dwindle amidst the fear of stimulus taper, exports have risen owing to good monsoon and a healthy agriculture produce. Gold, which remained on the hit list of government (to curb import) has now come much under control, observes Sachin Karpe.

However, it is important to educate people about various forms in which gold investment can be done. It may not always be necessary to buy gold in physical form as it does not give a good re-sale value. Gold ETF (exchange traded funds) or gold funds offered by mutual funds are attractive options to invest in gold. These are much better than the gold schemes offered by jewelers as these do not have tax benefits, explains Sachin Karpe.

Many things make gold funds a superior option. Physical jewellery comes with the price for making charges and purity of 22 karat usually. While selling them, cost for making is charged from the customer. Highlighting the disadvantages further, Sachin Karpe says that in certain cases, jewelers only encourage exchange of jewellery and not payment of cash. While remodeling the jewellery, a lot of quality gets eroded, leaving the customers at much loss.

These problems can be avoided with the means of Gold Funds and ETFs. In ETF, one unit represents 1 gram of gold. You can invest money through SIPs (systematic investment plans) for the purity of 99.5 % without fearing to the compromise in quality like the physical gold.

Value Added Tax and wealth taxes are also not levied on Gold ETF. In such, it makes all the more sense to invest in Gold ETFs than rushing for physical gold and watching it erode over a time, feels Sachin Karpe.


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