Diwali and shopping go hand in hand. And two of the most bought things during the festival of lights are gold and silver. What if you could purchase these precious metals in a new twist and secure your future financially at the same time? While jewellery, bars, and coins have always been preferred ways of buying gold and silver, virtual investments in these metals through Exchange-Traded Fund (ETF) Fund of Funds are now becoming the norm. Find out all there is to know about gold and silver ETF FoF and if you should buy them instead this Diwali.
First, let’s understand what gold and silver ETFs are
Gold and silver ETFs are a combination of stocks and mutual funds. They are listed and traded on the stock exchange like stocks but track the price of domestic physical gold and silver, similar to index funds. A gold ETF invests in gold bullion, and a silver ETF invests in silver. Every unit of the ETF represents a gram of the precious metal.
Now, let’s understand what gold and silver ETF FoF are
Gold and silver ETF FoF are also precious metal funds. They are mutual funds that invest in gold ETFs and silver ETFs. Thus, with a single fund, you can get exposure to gold as well as silver. Such funds aim to maintain equal allocation between gold ETF and silver ETF and rebalance it periodically.
Let’s move to the benefits to understand how ETF Fund of Funds triumph over physical metals.
Benefits of investing in gold and silver ETF FoF
No physical storage issues:
Gold and silver ETF FoF are stored in a dematerialised form in your Demat account. They do not have to be stored in a locker like physical gold or silver. As a result, there is no fear of robberies or loss.
High purity:
The purity of physical gold and silver is hard to validate. However, ETF FoF are backed by precious metals of very high purity. So, your money is safely invested in good quality, high-purity gold and silver.
Affordable:
Buying gold or silver jewellery can be expensive because of making charges. Other investment options like coins and small bars may be relatively affordable, but they may still require you to save up some money to invest. On the other hand, gold and silver ETF FoF are traded in units. You can buy a minimum of one unit and start investing your money.
Systematic Investment Plans:
ETF FoF allow you to make small, frequent investments like other types of mutual funds through Systematic Investment Plans (SIPs). Your SIP amount can be as low as Rs. 500/month. SIPs allow you to take advantage of rupee cost averaging and invest across market scenarios.
If these benefits appeal to you, you can invest in ETF FoF by following a few simple steps.
How to invest in gold and silver ETF FoF online?
Investing in gold and silver FoF is easier than you think. You can simply visit the website of the Asset Management Company, choose the fund, and proceed to make your investment.
Conclusion
Gold and silver ETF FoF can help you secure your future minus the hassles of physical metals. And since Diwali is all about new beginnings, it can benefit you to let go of traditional means of buying gold and silver and invest in simpler forms like ETF FoF.
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MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS. READ ALL SCHEME-RELATED DOCUMENTS CAREFULLY.
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MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
