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Merits and Demerits in investing in Gold ETF in India

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1) Most easier mode of investment when compared with conventional mode of investments in Gold like buying Gold ornaments, Gold coin

2) You can do buy and sell transactions sitting at home.

3) No wealth tax for Gold ETFs in India. No security transaction tax, No VAT, No Sales tax

4) You can buy Gold ETF as low as 0.5Gram.

5) Long term capital gain tax come into apply after one year for Gold ETF

6) No fear of theft

7) Purity of the Gold you Bought is guaranteed

8) Nowadays auditing of the Gold the fund houses bought, by the Government agencies.

9) No entry load and No exit load for Gold ETF

10) Hassle free method of investing in Gold

 

Demerits in investing in Gold ETF in India

1)      High expense ratio - when compared with e-Gold. Fund management expenses, annual recurring expenses, annual maintenance expenses all comes to about 2% to 3% depending on the company offering Gold ETF.

2)     When Gold market prices are stable and not moving fast, your investment value decreases.

3)     Tracking error - The value of Gold ETF you hold may differ from that of international market price of the Gold. It may comes to around 0.05% to 0.08%. This comes mainly due to liquidity factor and investment in other instruments like debt instruments and other securities.

4)     Price of Gold - ETF may vary with volume or liquidity of the particular Gold ETF in the exchanges. If sufficient volume is not available in the exchanges, then it can affect its pricing.

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