India has seen a significant surge in the number of upcoming investors after the covid 19 pandemic. Favorable returns from the stock market during this period are one of the main reasons for this. While most retail investors diversify their portfolios between equities and mutual funds, experienced investors seek stability and allocate the majority of their portfolios to gold. Popular gold investment assets used by investors include gold ETFs and sovereign gold bonds. However, with the rise of new-age investment options such as gold leasing that offer additional returns on gold investments, investors may be rethinking their gold investment strategies. In this blog, we compare popular gold investment options in gold ETFs with gold leases.
Storing gold at home is not recommended as it can be dangerous. Gold ETFs (Exchange Traded Funds) are much more convenient than holding real gold. His ETF on gold is managed in a passive manner and is a good reflection of the current gold price. The actual price of gold in India varies depending on location and market supply and demand dynamics. Gold ETFs also have lower transaction costs than physical gold.
Exchange Traded Funds of Gold are a way to invest in gold without physically owning it. They are financial instruments that track the price of gold and allow investors to buy and sell shares in funds that hold gold as an underlying asset. Gold ETF prices are directly linked to the actual gold price in the market and a demat account is required for investment.
When you invest in a gold ETF, you are buying a portion of a larger pool of assets held by the fund, rather than physical gold managed by a company. Gold ETFs offer a convenient and cost-effective way to invest in gold. One ETF is equivalent to 1 gm of gold
Overall, gold ETFs are a convenient and low-cost way for investors to gain exposure to the gold market, with typical long-term returns for gold ETFs around 10% per annum. Gold ETFs typically do not have a lock-in period.
With newer and easier ways to invest in and lease gold that has entered the market, it is always a good idea to do market research to find the most convenient and lucrative options.
Jewelers, like any other business, require raw materials and working capital to meet their business needs. Gold leasing is a method by which your gold bullion (digital gold) can be leased to these jewelers (lessees), and rental fees will be paid on top of the leased gold.
Gold leasing is a practice that has long existed in the offline market. However, this was only accessible to a closed group of ultra-wealthy individuals, and a few kilograms of gold were required to avail of this practice.
Fintech app Garruk The app has made this practice accessible to all and turned it into an investment asset.The Gold+ leasing feature allows users to earn an additional 5% annual gold on their regular gold investment, increasing their gold potential. Makes returns very attractive.16% per annum (11*% average uplift and additional 5% guaranteed). This makes it a high return investment product.
Gold purchased on the platform is leased to leading jewelers who offer additional gold interest on top of historical gold returns on leased gold. These jewelers are verified by Augmont, one of India’s largest gold smelters. Investors are also provided with his 100% bank guarantee on the leased gold.
What are the advantages of Gold Lease over Gold ETFs?
|Gold + (Gold Wreath)
|Gold+ allows users to earn up to 16% (11% + additional 5% Gold)
|Since Gold ETFs use gold as the underlying asset, returns range from 10% to 11%.
|An additional 5% return on top of the gold price increase
|No additional returns
returns in the form of
The extra return is also in the form of gold and is highly valued at market rates as well
The overall return is in the form of cash. However, this does not provide additional returns.
One time 3% GST applies
Includes 2 types of fees.Fee 0.4%B. Storage fee and brokerage fee are also charged
Overall, both Gold ETF and Gold Lease offer the opportunity to invest in gold, but Gold Lease offers the opportunity to earn an additional 5% on top of Gold for a return of up to 16%. It may be a wiser choice. It will be a clear winner for investors looking to get higher returns on gold investments on par with investments such as mutual funds. You can also choose leasing as your primary vehicle.