It is essential to look at the difference between Gold Saving Funds and Gold ETF’s. The Gold saving fund mainly marketed on the fact that one can invest in gold funds without owning a demat account and at the same time set a SIP for the same.
However, the alternate option of Gold ETF’s doesn’t not permit investments and/or SIPs without a demat account. However such details are hidden by agents as well as the details of costs and do not educate their clients on how things actually works.
The main differences between Gold Savings Fund and Gold ETF are:
Gold Savings fund consists of simple investments. It is basically a mutual fund that invests in their Gold ETFs instead of regular ETFs. They also invest in some other short term funds as well. If the investor is unable to consistently track his or her investment or even if he is new to the investment world, it is a valuable option to invest, since it is a systematic investment plan of Gold Savings fund.
These funds however do not directly invest in gold but indirectly through Gold ETFs. However, being termed as a Gold Savings fund it invests through Gold ETFs, and they generally have higher charges.
Gold Exchange Traded Funds aka Gold ETFs make direct investments in Gold. The fund manager keeps a lookout for daily gold prices and trades in physical gold to make the desired returns. Gold ETFs also have their own high cost ratio which is considered as the secret of the great investment results.
The investments take place electronically meaning that one can invest in gold without actually holding it in a physical form. But an individual needs to own a Demat account in order to invest in a Gold ETF. Also, investments cannot be made through an SIP, which is not the case with Gold Savings Funds.
As you can see from the above differences that even though Gold Savings Fund do not require any exclusive attention, there are extra charges that are required. Also Gold ETFs can be managed at will. However, if you think you do not have the skill to buy Gold ETFs yourself, perhaps Gold Savings Funds are a better idea for you.
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