3. They're priced right...
And so, you're not likely to buy gold at inflated prices. The problem with precious metals is that there is a lot of scope for price disparities (read overpricing). While one jeweller may offer the same quantity of gold at a certain price, another would have a different tag attached to it.
But this scenario doesn’t happen in gold ETFs.
4. They're more tax efficient...
The taxation system for gold ETFs is the same as for non-equity mutual funds. If you hold gold ETFs for more than a year, you pay a long-term capital gains tax of 10 per cent without indexation or 20 per cent with indexation, whichever is lower, on the profits made.
But in case of physical gold, you have to hold it for at least three years for the long-term capital gains tax to kick in.
Gold ETFs held for less than a year attract short-term capital gains tax. Meaning the profits are added to your annual income and taxed according to the bracket your income falls in. Twelve months is far easier to wait for than 36 months, isn't it?
Advantages by Investing in Gold ETF compared to Physical gold
1. Gold ETF are virtual and not Physical
It is not possible to be stolen. They need no lockers, no security guards, no TV cameras and no police control room numbers.
When you buy gold ETFs, though you own a certain amount of gold, you don't actually get delivery of the yellow metal. You can store the units virtually in your demat account and save yourself from losing it
But do remember to protect the login and password to your demat and bank accounts.
2. Gold ETF are pure like physical Gold
And so, there's no chance of you being fooled by jeweller. Unless you're a goldsmith, gauging the purity of physical gold is hard.
Gold ETFs only deal in 99.5 per cent purity gold. So by choosing them over physical gold, you spare yourself the consequences of misplaced trust. So no need to search for trusted jeweller to buy physical gold.
5. They're easier to sell...
And get you the right price. Physical gold bought from banks cannot be sold back to them. That bought from jewellers comes with an unfair 'commission' charged when you decide to sell.
With gold ETFs, you don't have to go to 10 different jewellers who will fuss over the quality and the price before handing you your spoils. They're more liquid than physical gold and fetch you the market price.
6. They're available in small sizes...
If you ask your local jeweller to give you half a gram of gold, chances are there they may charge. But gold ETFs are available in small denominations and you don't have to have lots of spare cash to invest in gold anymore.
One gold ETF unit represents 1 gram of gold. You can even buy half a gram of gold if that's all you can afford this month. And watch your gold pile and investments grow at the rate you choose. This isn't a benefit you will get if you go to buy physical gold -- as coin or biscuit or jewellery.
7. They're wealth tax-free...
Physical gold attracts wealth tax if you're holding more than a certain amount. At the moment, that amount is Rs 15 lakh. But there is no such taxation for gold held through gold ETFs. The cash you save on tax you can always invest in more gold... ETFs, of course.
While gold ETFs score in so many ways over physical gold, they do not give you the satisfaction of seeing and feeling the yellow metal.
Welcome to Indian Share Market
Your Desire to Earn
Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but www.daytradingshares.com does not warrant or guarantee their accuracy or date.
www.daytradingshares.com takes no responsibility for any investment decisions based on recommendations provided on website.
Financial contents like Technical charts, historical charts and quotes are taken from NSE and Yahoo sites.
Note - All quotes are delayed by 15 minutes and unless specified.
Google Adsense Ads are posted on every page of the website so visitors clicking on Ads and going to those links and carrying any financial deal is not at all related to www.daytradingshares.com and any financial deal should be done on their own sole responsibility.
Please read at www.daytradingshares.com/disclaimer.php before using any material or advice given at www.daytradingshares.com
Copyright © 2012 DayTradingShares.com. All Rights Reserved