Gold for 22 grams has been on the rise since the start of the year. The precious metal which was around the Rs 37,000 mark has now galloped to Rs 47,000 for 10 grams. It's always advisable to keep at least 10 per cent of your portfolio in gold. We are suggesting 3 Gold ETFs as an investment and there is nothing to get worried, when you hear the word ETF, as we will explain, how simple investment this is and why you should be buying them.
What are gold ETFs and why you should buy them?
If you have already invested in shares, you can simply buy gold ETFs as you buy shares. So, just as you can buy 1 share of ICICI Bank, so you can buy 1 share of a gold ETFs. They are traded on the stock exchanges like shares and can be bought and sold anytime just like shares. They track gold prices, so when gold prices go up, they too move up in tandem.
If you buy physical gold, when selling you will lose a lot of money due to the margin on buying and selling. Physical gold can be easily stolen and you need to incur an additional amount towards bank locker charges. Gold ETFs cannot be stolen, they track gold prices and can be easily bought and sold on the stock exchanges, where you may already have a demat account. Here are 3 gold investments that can offer high returns.
SBI Gold ETF
SBI Gold ETF has generated a return of 38 per cent in the last 1 year, as gold prices have gained momentum. This is much higher returns than what any other asset class in the country may have generated. This beats investments like shares, real estate and fixed deposits rather easily.
SBI Gold ETF is currently trading at Rs 4370 on the NSE. If you have a holding period of 2-3 years, gold can generate good returns.
This is a much better investment than physical gold and in case you wish to buy gold, go for this ETF.
HDFC Gold ETF
This gold ETF too has generated a return of 38 per cent in the last 1 year, while the 3-year annualized returns has been close to 18 per cent, which again beats most asset classes. Again, this instrument too is traded on the stock exchanges, so one can buy and sell them without any hassles.
While gold has rallied a fair bit, we believe that it has the potential to rally further, which should make this Gold ETF a good bet.
Nippon India ETF Gold BEES
This investment has given a slightly lower returns, when compared to the above two, but, has still generated a whopping returns of 37 per cent in the last 1 year. The Gold ETF is currently trading at Rs 4370 on the stock exchange and has the potential to generate good returns. It's important to remember that one should have some investment in gold, as it is considered a safe haven.
With all the tension and chaos surrounding the globe, due to Covid-19 its best to stay invested in gold. Nippon India ETF Gold BEES is a good investment from a 2-3 year perspective.
About the author
Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds, commodities and tax planning.
The article is not a solicitation to buy, sell in gold or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.