Know what is Gold ETF, Debt ETF and more | Money-making made easy - Explained in easy steps

What is Gold ETF and how to invest in it: Gold price had been soaring till recently and now it has steadied. Many people are wondering whether they should invest money in it now. Gold is definitely an excellent thing to put your money in to safeguard against financial emergencies - they can be personal or national or even global. For instance, corona pandemic created a global financial emergency

However, buying jewellery is not the right way as it includes making charges and that reduces your profit when you go to sell it. Source: Reuters

What is Gold ETF and how to invest in it: Gold price had been soaring till recently and now it has steadied. Many people are wondering whether they should invest money in it now. Gold is definitely an excellent thing to put your money in to safeguard against financial emergencies - they can be personal or national or even global. For instance, corona pandemic created a global financial emergency. Idea is that it will keep your money safe and even grow your money, depending on the situation. However, buying jewellery is not the right way as it includes making charges and that reduces your profit when you go to sell it. That is where gold ETF comes in. You pay for the yellow metal only and you get profit as per prevailing gold price that day.

Gold ETF is an excellent instrument to diversify your portfolio that may include stocks, bank FDs etc. So, know here about Equity, Gold and Debt ETFs

Just remember a diversified portfolio can earn bumper profit for you.

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Benefits of Exchange Traded Funds of ETFs in a portfolio

What is ETF and how to invest in this?

What is Gold ETF and how much should be invested in this instrument

Why to invest in ETFs?

How to distribute debt-equity ratio in your investment portfolio

What are the benefits of including ETFs in portfolio

When is the right time to invest in Gold ETFs

How many types of ETFs are available and what are the advantages and disadvantages?

Zee Business Guest Chintan Hariya, Head – Product Development and Strategy at ICICI Prudential clears all doubts

It is important to keep good funds in the portfolio

Avoid over-diversifying the portfolio

Decide the funds depending upon your financial goals

Over-diversification could have an impact on your investments

Over-diversified portfolio is difficult to manage

What is ETF?

ETF is Exchange Traded Funds

Many types of securities are there in ETF portfolio

The returns from ETF are similar to index funds

They are listed in stock markets and can be purchased or sold

Benefits of ETF

It is a viable option for direct trading

No need to pay advisory or management fees

ETF also have a relatively lower tax outgo

ETFs also have low cost of holding

You get a an ETF certificate just like a stock certificate

Types of ETF

Equity ETFs

Gold ETFs

Debt ETFs

What is Gold ETF?

Gold ETFs are Gold Exchange Traded Funds

You can invest in this like equity

The price of Gold ETF depends upon the price of Gold

Facility of one time or instalments available

Higher expense ratio than Equity ETFs

Higher returns possible

Much better option than investment in physical gold

Debt ETF

Very few options available currently in this instrument

AMCs cab soon bring new debt ETFs

Expense ratio in debt ETF is very low

Expense ratio at 0.0005 per cent

Bharat Bond ETF – 0.0005%

Equity ETF

Low expense ratio in Equity ETF

Expense ratio around 0.05%

Smart Beta, multifactor ETF has slightly higher expense ratio

Smart Beta ETF has 0.15 to 0.43 per cent expense ratio

Why ETFs not so popular option?

Not much awareness about ETFs among investors

They prefer to invest indirectly in markets

Direct trading is a better option

They score less in comparison to equity mutual funds

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ETF suitable for Whom?

ETFs suited for long duration investment

Good returns on back of lower cost

Facility of ETF liquidity also available

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