Many people have invested in gold. There are others looking at the prospects of making such an investment. This most precious gem is described as a useful diversifier. Market factors that decide the price of gold is very diverse from other monetary assets. The cost moves in the other way contrary to stocks, bonds and treasury bills. It also helps lessen portfolio hazards.
What else can you expect from gold?
It is very liquid and manageable. You can buy and sell this metal easily. Gold can be converted to cash with minimal formalities. Trade spreads are quite restricted just like the stock market. It is also an exclusive investment. Acquisition is not covered by compulsory government reporting compared to real property and stocks. Among different asset categories, gold is said to be the toughest because it offsets the results of price increases and instability of exchange rates. The presence of gold in an investment portfolio makes it steadier and flexible in the midst of economic unpredictability.
How do you start with a gold investment? Investing in physical gold is preferred by most people the masses. Yet Exchange Traded Funds or ETFs have become more popular lately. The ETF is deemed as a better vehicle. The fund is an unrestricted mutual fund. The components stand for physical gold which is 99.5% unadulterated. Each unit represents one gram of gold and traded on the stock exchange similar to single stocks of corporations.
Gold funds provide an opportunity for investors to plan for the purchase depending on future requirements. Besides, there is no danger of burglary. You need not worry about storage cost since everything is in paper form. There are no surcharges for exchange traded funds and this can be exchanged in manifolds of one kilogram units. Sales tariffs, value added tax and securities transaction levies are waived. These are qualified for capital gains after one year compared to physical gold like bars and coins. Moreover, investors are not required to pay wealth taxes on exchange trade funds.
Yet, a minimal asset management fee is imposed by the fund house. Hence, the return is a little less than actual increases in gold price. At the same time, there are supplementary costs at the time of purchase and sales. This comes in the form of commissions. Another downside with exchange traded funds is liquidity. This influences the flexibility of buying and selling in the long term.