Gold funds are a great option for people who want to build a store of value. This is because, despite going through price fluctuations, gold is one of the best assets to build a financial reserve.
What makes gold so interesting as a store of value is the fact that it maintains its value over time. That is, 100 years from now, this precious metal will not have lost its value.
In addition to gold funds, it is also possible to reserve with physical gold or with gold contracts traded on the stock exchange. If you are going to buy physical gold, it is important to have a safe storage place. Contracts are traded similarly to stocks.
What Are Gold Funds?
Gold funds are a type of investment fund, aimed at investing in gold. In addition to having good liquidity , this is one of the most practical ways to invest in this precious metal.
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Regarding the risk classification, gold funds are considered moderate. This is because it is an investment in variable income , whose oscillation depends on changes in the price of gold.
How Do Gold Funds Work?
Gold funds are considered hedge funds . As its name suggests, its focus is on investing in gold-backed assets. In this way, the fund can invest in gold contracts or gold ETFs traded abroad.
The investment in this asset can be short, medium or long term. However, as the objective of investing in gold is usually capital protection, it does not make much sense to invest in the short term. After all, gold doesn’t experience strong short-term appreciations, nor does it generate passive income.
The operation of investment funds in gold is similar to other types of funds. Therefore, the quotas are traded in investment banks or in stockbrokers . The manager is responsible for making investments in the fund and the investor has no decision-making power in this regard.
Taxation of gold funds is similar to other funds. Therefore, in the first 30 days, we have the IOF discount , in case the investor redeems the application.
Income Tax (IR) starts with a maximum rate of 22.5% and, as time goes by, reaches a minimum of 15%. Finally, we still have the come-quotas , which works as an anticipation of the IR.
It is important to point out that the investor’s equity may increase in value according to fluctuations in the price of gold. However, the objective when investing in gold investment funds is not appreciation. The intention is to allocate part of the capital in gold to form a reserve of value and protect part of the equity over time.
Basically, there are three types of gold investment funds available on the market:
1- Real Gold Funds: The focus of this fund is to invest in gold contracts on the stock exchange. This type provides currency protection and has the advantage of not being impacted by fluctuations in the dollar .
2- Gold Funds In Real + CDI: The purpose of this type of fund is to invest in the medium and long term, focusing on the change in gold prices along with the CDI .
3- Gold + Dollar Funds: Gold + dollar funds invest in assets that follow dollar fluctuations and, therefore, do not offer exchange rate protection. These funds go through more fluctuations, as the US currency fluctuates daily.
Reasons To Invest In Gold
The main reason to invest in gold is to create a store of value. In short, over time money loses value.
However, gold remains valuable, which means that by turning your money into gold, the investor is preserving his purchasing power in the future. This is why, generally speaking, gold is sought after in times of crisis.
What made gold so good for creating a reserve was its characteristics. First, it is scarce, which means that it cannot simply be produced by governments, as money can. Second, it does not deteriorate or lose its properties over time.
The third feature is that it is accepted worldwide and is easily verifiable. Finally, we have the fact that he has proven himself over the years. That is, more than 5 thousand years ago it was already valuable and will probably continue to be in the future.
Another reason to invest in gold is the diversification of the investment portfolio with an asset that has the ability to balance the portfolio. It turns out that when the stock market depreciates, gold appreciates. That way, with gold in your portfolio, you can dilute some losses in your portfolio.
The main advantage of investing in gold investment funds is the capital protection provided by investing in an asset that works as a store of value.
Another advantage is that, in crises, the tendency is for its price to rise. In addition, it provides diversification of the investment portfolio, which is a way to protect against possible losses.
On the other hand, we have the disadvantage that prices are quite volatile, and their quotation is usually affected by macroeconomic events. We also have the disadvantage that this asset does not generate any passive income and does not offer great appreciation over time.
The first step to investing is to plan and define your goals. In this step, you must establish the percentage of your portfolio that will be allocated to gold funds, for how long and for what reason. You can also consider buying futures contracts on the exchange and even purchasing physical gold. The best alternative will depend on your goals.
The next step is to research investment funds that invest in gold. Make a comparison considering the fees charged, the fund’s performance and history. After deciding which fund you are going to invest in, just open an account at the brokerage, make a transfer and invest.
Two tips for those who are starting to invest in gold: 1st – Invest little by little : Make an application and observe its performance. As it is variable income, it will undergo fluctuations, even if it is an asset aimed at capital protection and not for appreciation.