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Considering investing in Gold ETFs?
To find an ETF suited to your needs, it may be a good idea to consider the following factors:
- Five-year returns: Most gold ETFs are generally pegged to the spot gold price. This means that returns should align with gold prices. It can be beneficial to check gold prices over the last 5 years.
- Expense ratio: This annual fee is deducted from your investment in the fund. According to ETF.com, the average expense ratio for Gold ETFs is 0.65%. A lower ratio is beneficial, especially if you're just getting started with Gold ETFs.
There are also a few other things to watch out for:
- Leveraged ETFs: Leveraged Gold ETFs bet on future price movements. These can be risky as they use financial derivatives and borrowed money.
- Gold exchange-traded notes: ETNs are secured debt obligations. They don't actually own the underlying gold and present a greater risk of credit default.
Both Leveraged Gold ETFs and ETNs are geared towards seasoned, active traders..
To learn more about identifying the right ETFs using screener tools, check out How to select the an ETFs for your needs.
After you've done your research and weighed your options, you're ready to buy Gold ETFs. The process is straightforward and should be familiar if you've ever purchased stocks through an online broker. If you do not currently have an account with a broker, you can open a TD Direct Investing account, here.