7 tips on investing in gold ETF

Gold exchange traded funds or commonly known as gold ETF is one of the popular investment tools. It is a more convenient option for investment than buying the physical gold. Gold has always been in the market at the highest price. Over the years its prices have not come down making it a valuable investment. It is also safe which means it not that volatile. Gold ETF is an open-ended mutual fund scheme which primarily invests in gold bullion. A lot of people these days are moving toward gold ETF because of its convenience which is why one should know some necessary points regarding it.

1. Earn more profits than other gold-based funds

If the investor is willing to invest a large sum then gold ETF is an appropriate option. It is a more profitable investment than other gold-based investments. Due to its convenience, it has been found to be more beneficial than physical gold investment.

2. Keep an eye on price trends

When you are dealing in gold exchange traded funds, you need to keep an eye on the changing price trends of the gold. It is just like stocks—you want to buy them at the low price and sell them at a higher price.

3. Try to find a fund manager with low charges

Like other mutual fund investment options, gold ETF comes with brokerage range from 0.5 to 1 percent. So, you are buying the ETFs make sure you find the stockbroker or the fund manager whose brokerage fees are as low as possible.

4. Examine the performance of the fund

Low brokerage or commission charge shouldn’t be the sole criteria of selection of fund. You need to observe and examine the performance of the fund as well over the last few years. It will give you a clear idea of that fund making it easy to handle it in future.

5. Monitor the transaction

If your gold ETF is managed by the fund manager then it is advisable to monitor all the transactions done for you. Your fund needs regular monitoring so that its performance will be improved. Besides, you get the control over the transaction done every now and then.

6. A good medium-term investment

The investment in this yellow metal should be short or medium-term. With that period, it gives you excellent results. A long-term investment in gold ETF has low returns, i.e. around 10 percent per annum.

7. Not too heavy investment

Although gold ETF is a safe and beneficial investment option, it is advised to invest around 5-10% of your total investment in gold ETF. The main purpose of this is to keep your portfolio stout, diverse and returns stable.

That being said, gold exchange traded funds are one of the best options of short to medium-term investment. It has solid returns with minimum risk involved. Besides, it is far more convenient than other investment options making an excellent choice.