In the past five years, as numerous investors were seeking huge returns from cryptocurrencies and equity markets, a powerful opportunity to build wealth was emerging in the form of Gold Exchange-Traded Funds (Gold ETFs). Recent data shows that a disciplined investment of just Rs10,000 per month via SIP (Systematic Investment Plan) in Gold ETFs has grown to nearly Rs10 lakh in just five years.
Yes, you read that right. Gold - the timeless asset that has been a symbol of wealth for a long time has demonstrated its value in modern investment portfolios.
If you did not enjoy this golden era, then is it too late? Let us look at the reasons why Gold ETFs earned such amazing returns, and if it's still an ideal moment to make an investment.
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Gold ETFs are exchange-traded funds that follow the price of physical gold. Contrary to the traditional method of buying or acquiring gold through coins, jewellery or bars, Gold ETFs provide a more secure, efficient, affordable, and liquid option.
Each unit of a Gold ETF usually represents one gram of physical gold. These units are traded on stock exchanges, just like stocks. This allows investors to buy or sell gold without the worries of storage, making charges, or purity concerns.
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Let us have a glance at the figures.
If an investor had commenced a monthly SIP of Rs10,000 in Gold ETFs five years back, the aggregate investment over 60 months would have been Rs6,00,000. But owing to the consistent increase in gold prices and the compounding effect, the investment would be worth almost Rs10 lakh today, equivalent to a CAGR of more than 16 percent.
This type of return is as good - and at times better - as what equity mutual funds have delivered at the same moment. Gold has a tested record of performing well during bad periods, including the COVID-19 crisis and international wars, when stocks tend to be in a downturn. This is where gold shows its value as a consistent and stable investment.
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The prices of gold have risen significantly over the last couple of years. There are several reasons for it:
Uncertain Times: The COVID-19 pandemic, the rise in inflation and global conflicts such as the war between Russia and Ukraine caused people to be concerned about the economy. If things seem insecure, investors typically go to gold since it's considered to be a secure place to store their money.
Protection Against Inflation: Gold has always been a smart way to protect your money when prices of everyday things go up. Since inflation has been high lately, more people have started buying gold to keep their savings safe.
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Falling Rupee: Since the Indian rupee decreased in value compared to its counterpart, the US dollar, the cost for gold within India naturally went up. This has helped Indian investors earn more money through their gold investments.
Big Buyers Joining In: Central banks from around the world, such as the Indian Reserve Bank, have been buying more gold to build their reserves. This strong demand also pushed prices higher.
Still thinking about whether Gold ETFs are right for you? Here are some simple reasons why they are a smart choice:
Easy to Buy and Sell: You can buy or sell Gold ETFs anytime during market hours, just like shares. No waiting, no hassle.
Clear and Fair Pricing: The price of a Gold ETF moves with the real market price of gold, so you always know what you are getting.
No Worries About Storage: Unlike physical gold, you do not have to worry about keeping it safe, paying for a locker, or dealing with theft. It is all digital and secure.
Tax-Friendly: If you hold Gold ETFs for more than 3 years, you get the benefit of long-term capital gains tax rates, which are lower than short-term taxes.
Also Read:- Gold vs. Cryptocurrency: Which is the Safer Investment in 2025?
What If You Missed the Rally? Do not Worry, Gold Still Has Shine Left!
Here is why gold can still be a smart investment today:
Still Good for the Long Run: Gold continues to be an important part of a balanced investment portfolio. Experts often suggest putting 10 15 percent of your money into gold or gold-related options to reduce risk.
World Still Uncertain: Global issues like wars, political tensions, and economic slowdowns are still happening. In such times, gold usually performs well because people trust it during uncertainty.
Weakening Rupee: As the Indian rupee struggles against the US dollar, the price of gold in India could stay high which means more potential gains for investors.
So even if you missed the earlier rise, gold still has the potential to protect your money and grow your wealth. It is not just about quick returns gold plays the long game.
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Open a Demat and Trading Account: First, you need an account with a stockbroker like Zerodha, Groww, ICICI Direct, or any SEBI registered broker. This is where you will buy and sell your Gold ETFs.
Pick the Right Gold ETF: Not all ETFs are the same. Look for ones that have a good track record, low tracking error which means their price closely follows real gold prices, and high AUM (Assets Under Management), which shows they are trusted by many investors.
Start Small with SIP or Go Big with Lump Sum: You can invest a fixed amount every month through SIP (Systematic Investment Plan), which helps you average out your cost over time. Or you can invest a lump sum if you have a larger amount ready.
Keep an Eye on Your Portfolio: Check your investments from time to time. Make sure your gold allocation fits your goals. If gold grows too much or too little in your portfolio, rebalance accordingly.
Also Read:- Exploring Gold: Its Significance, Impact, and Future
Traditionally, Indians have held physical gold for weddings, religious occasions, and as a sign of prosperity. However, there is a growing shift among younger investors towards paper gold for wealth creation.
Physical gold comes with making charges, storage issues, and risk of purity which are all eliminated with Gold ETFs.
Still, if you are holding physical gold and considering selling it for better returns or liquidity, you might be wondering where to sell gold Delhi?"
Many reputed jewellers and gold buying services offer instant valuation and payout. Make sure you get your gold appraised by a certified buyer, check for hidden charges, and compare rates before selling.
Similarly, if you own precious stones and are looking to unlock value, consider trusted gold buying company in Delhi often found in metro cities who offer on the spot payment based on global market prices.
Gold has proven to be a powerful wealth-building tool, especially through smart options like Gold ETFs. If you are investing or selling, making informed choices is key. If you are looking to sell gold or diamonds for instant cash, visit 24Karat a trusted name for secure, transparent transactions. Do not wait turn your gold into growth today!
Yes, most brokers allow you to set up a SIP in Gold ETFs so you can invest in gold systematically every month.
Gold ETFs are backed by physical gold stored in safe vaults. They are regulated by SEBI and are considered safe investments.
Gold prices are volatile. Your Gold ETF's returns may be impacted if gold fluctuates in performance or if there is a demand drop around the world. However, these risks are manageable if gold ETFs are used as a hedge in your portfolio for the long term.
Also Read:- Top Countries with the Largest Gold Reserves in 2024: Where Does India Stand?