Gold Funds, the New Investment Mantra

by on April 26, 2010

Looking for an efficient Investing Asset? or want to Invest For Your Post Retirement Tenure? Still Confused. Well i would like to introduce the new Gold Funds For those who are intrested in Investing But Probably Not the Mutual Funds. Confused? Gold Funds are based on a total different yet unique concept it is specialy beneficial for those who are interested to invest in gold but would not like to purchase gold bars or coins because of various reasons like security and troublesome affair. So Now if you are looking to invest in Gold Funds But Dont know what exactly it is or how to get hold of them then kindly Go through Some basic facts which will help you.

What is the Difference B/W Mutual Funds and Gold Funds?

To be specific Gold Funds are more likely similar to the mutual Funds its just that in Gold Funds you invest in gold on papers instead of Real Gold Artifacts. whereas on the other hand Mutual Funds Goes with the usual Debt Instruments and Equity Shares. In Gold Funds it goes as every individual Unit of the fund is equivalent to a gram of Physical gold.

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How To Get Hold of The Gold Fund?

In Gold Fund money is collected from different investors and is then used to buy gold in physical form. A major portion Of the collected money is then used for buying gold and the rest is invested in buying debt products like bonds and money market instruments for eg. shares. As the major Investment of the fund is done in buying the gold therefore, the asset value of the fund goes according to the price movement of gold. You can monitor the status and the value of your funds through Net Asset Value (NAV). Which further gives you an idea whether to invest more into the same or some other offer even after the initial offer closes.

How Beneficial it is to Invest In Gold Funds?

If you Invest in gold which is generally through jewelry or coins. But it has one drawback and that is its physical limitation ie: there is a certain limit of gold that you can store due to its major physical existense .Moreover the invester cant take the full advantage of the price variation. On the other Hand Gold funds are extremely convinient in terms of ROI (Return Over Investment), as you don’t face such problems. The Gold Funds when purchased are directly credited to your demat account.according to the finance and investment experts It is always advisable to invest minimum 10% of your saving in gold, as Gold yields the most returns as compared to the equity and shares and is a low risk factor investment.

What is the Tax Structure?

As Gold funds are considered similar to the mutual funds, But are not treated like wise with equity schemes. Thus the investors are unable to enjoy the same tax-free treatment because of which the short and long term capital gains tax, with indexation benefits, become payable.

I think these details would have cleared many doubts in your mind related to the Gold Fund Investing.

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