Investing in gold is popularly known as investing in gold jewelleries or gold coins. But some of the investors with better knowledge about the asset markets are realizing the benefits of buying Gold Exchange Traded Funds (ETFs) from their regular mutual fund mobile apps. Some fresh and young investors are looking forward to diversifying their portfolios and opting for gold as the best affordable option. They often try to understand how to buy gold ETF, hassle-free, from a regular mobile app. Here is the way how can you invest in gold ETFs regularly, and avoid the worries about gold impurities and storage costs, with easy liquidity.
How can you buy a gold ETF
Investing in a gold ETF is as easy as investing in other company stocks, the procedure is the same as other ETFs. As you buy other ETFs through a mandatory Demat account, you need to have the same to buy gold ETFs. These will also be traded on the BSE or NSE at the current market price of gold. However, the Net Asset Value (NAV) of the ETFs will vary upon the house. The SBI gold ETF price will certainly differ from an Axis gold ETF because of the change in NAV and amount. So according to the company's ETF costing, you can adjust the numbers of ETFs you are buying. If you have a better budget to invest, you will buy more numbers of ETFs, if you have a crunch in investment amount, you can buy lesser numbers of ETFs. You can start with buying even only one unit ETF to understand the market first. You can enter and exit from the investment any time you wish.
You need to have mobile apps like Groww or Zerodha, etc. along with a Demat account. Log in to your profile there and search gold ETF in the search box. You will be able to see a list of companies that are offering gold ETFs at different prices. For example, you will get SBI gold ETF, Axis gold ETF, ICICI gold ETF, Aditya Birla gold ETF, Kotak Gold ETF, etc. Then select your preferred company fund according to your affordable unit cost or NAV and returns. Tap on the selected fund and you will get the buy option on top. If you want to have a better idea of the fund and want to do some research, you can tap on the 'fundamentals' to check about the fund's performance.
However, to invest in a particular ETF, after clicking on the 'buy' option, you need to fill in the details of your preference - like the quantity, and product type. Product type will be of 2 types - like MIS and CNC. For intraday trading, that means you will buy and sell the fund on the same day, you will have to select the MIS option. Otherwise, if you want to keep the gold ETF on hold for longer, then select the CNC option, which is preferred more. You can also hold the gold ETF for few years, for better returns. Then select either the 'market' price, which means the gold rate at the current time, or set your price 'limit' to buy the ETF. If you select the 'market' price then you do not need to put any price, because the app will automatically derive the price from the market. Otherwise set your price 'limit' by yourself. in that case, when the market rate will go at your price, you will be able to buy the ETF. You can also set your 'stop loss' and 'set target' according to your market knowledge, otherwise, you can leave it if you are a new investor. Then select the validity and tap on the 'buy' option finally.
After processing check the 'Execute' option at the top of your mobile app. There you can see your bought gold ETF details. If you want to see the profit and loss of your gold ETF, go to the portfolio at the bottom of your app. Then under the 'Position' option, you can check the daily profit and loss. If you are holding your gold ETF for more than 1 day, then check under the 'Holding' option. The gold ETF portfolio will be shown there.
After that, for liquidity, you can exit from the gold ETF at any time. In the same manner, click on your ETF under the 'Holding' option. You will find 2 options, - 'add' and 'exit'. Tap on the 'exit' option at the bottom to sell your gold ETF. To sell you can again set your target price. Set the exact price you want to sell your gold ETF at, and wait for somebody to buy it. Otherwise, you can also sell the gold ETF at the market price, if the current market rate is better than your purchase rate. Remember one thing carefully, if you have purchased the gold ETF under the MIS option, then you will have to sell it under the MIS option, and if you have purchased it under the CNC option, you will have to do the same at the time of selling.
Before buying or selling gold ETF just check the company AUM. It will help you to get immediate liquidity at any time. The Nippon gold ETF, SBI gold ETF, HDFC gold ETF are the top 3 options preferred by investors because of their higher AUM.
Electronic gold receipts (EGR)
However, SEBI has recently cleared a proposal of setting up a gold exchange where it will be traded in the form of electronic gold receipts (EGR) to have a transparent domestic spot price discovery ecosystem. EGRs will be identified as securities. Ajay Tyagi, Chairman of SEBI said, "EGRs will have the trading, clearing and settlement features akin to any other securities. He added, "The gold exchange, encompassing the entire ecosystem of trading of EGR and physical delivery of gold, is expected to create a vibrant gold ecosystem in India."