Gold and property are the best forms of investment, if you can afford them! Investing in gold is a great option, provided you know what you are heading for and can realize the potential benefits. Here are some tips on how to get started.
Gold funds
It’s always a good bet to get an expert who can guide you through these relatively new funds if you are a serious investor. As with mutual funds, you can place your money on the precious metal in the stock market through gold funds too. And if you thought this was just another stock, you will be pleasantly surprised to find your money converted to gold if you strike it rich in the game. Generally speaking, a single unit of the gold fund equates nearly one gram of pure gold.
So how do you go about it?
Generally, gold funds attract money from investors, and this is used to purchase physical gold bars. The total amount collected is divided into chunks. A large part of the money is used to purchase gold and the rest is used for other products like gold bonds, etc. A slight deviation from mutual funds is that this money is not used to invest in regular equities. A large chunk of money is invested in gold, and the overall performance would vary according to the variation in gold prices. This would mean that you need to scrutinize deviations in gold prices to gain the maximum profit from the investment. The Net Asset Value (NAV) reflects the performance of your fund and if this is on the higher side, you might get a chance to make new investments even after the initial offer is closed.
What does it hold for you?
To date gold has always been sold in the form of gold coins or jewelry. And there is only so much that you can possibly store of the metal physically, as you cannot go beyond a certain amount, and in the event of a price difference on the higher side, you won’t be able to take complete advantage of the situation. Gold funds come to your rescue in such a case. All you need to do is buy some units of a gold fund to begin with and these units can be easily credited to your demat account. Of course, it’s better to invest only a certain percentage of your savings and not all of it in gold, so that you have enough to fall back upon in case of need, besides property.
Tax implications
Gold funds, although similar to mutual funds in many ways, are yet to be completely at par with equity schemes. You don’t enjoy as much tax-free treatment, but you can liquidate these at any time you want. And an immediate benefit is that, unlike general stocks, you can be sure of stable gold prices and definite seasons where you can get the maximum profit.
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