Pocketful

Gold BeES vs Gold ETF: Meaning, How It Works, Taxation

Investing in gold has moved beyond buying jewellery or coins. Today, digital gold options are offering better choices to investors. Options like Gold BeES and Gold ETFs offer a smart, secure, and cost-effective way to invest in gold through the stock market.

So, if you are an investor looking to invest in gold, then you have just landed at the right place. This financial guide will share everything about Gold BeES vs Gold ETF in detail here.

Gold ETFs and Gold BeES: A Quick Comparison

Now that you have explored all the basic details linked to both the investment options, let us now explore a brief comparison of Gold BeES vs Gold ETFs here:

Aspect	Gold BeES	Gold ETFs
Category	Gold BeES is a specific gold exchange-traded fund offered by Nippon India Mutual Fund.	Gold ETFs refer to the broader category of gold-based exchange-traded funds offered by multiple fund houses.
Fund House	Managed only by Nippon India Mutual Fund.	Offered by various AMCs like HDFC, ICICI, Axis, Kotak, and more.
Unit Size	Each unit represents approximately 0.01 gram of gold with 99.5% purity.	Varies as it depends on the price of the ETF.
Liquidity	Highly liquid with a large daily traded volume.	Liquidity depends on the specific fund and its trading activity.
Expense Ratio	Fixed at 0.80%.	Varies between 0.32% to 0.78% depending on the AMC.
Tracking Error	Tracks domestic gold prices closely with low tracking error.	May show higher tracking error in some funds due to operational inefficiencies.
Taxation	Short-term gains (held for 12 months or less) are taxed as per income tax slab. Long-term gains (held for more than 12 months) are taxed at 12.5% without indexation.	The same tax rules apply – STCG as per income slab, LTCG at 12.5% without indexation.

Understanding Gold BeES

Gold BeES is an Exchange-Traded fund (ETF) that tracks the domestic price of gold by investing primarily in physical gold of 99.5% purity. They offer investors a way to gain exposure to gold price movements in a digital and secure format.

This means you can invest in gold without the need to buy or store physical gold. Gold BeES is an open-ended scheme, which does not have a maturity or lock-in period. It is listed and traded on stock exchanges like any other share.

So when you buy Gold BeES, you are investing in approximately 0.01 grams of gold, as it trades around ₹80 and the price of 10 gm of actual gold is around ₹90,000. This allows investors to start investing in gold with a small initial capital.

In India, Gold BeES is managed and offered by Nippon India Mutual Fund. It is the country’s first and most traded Gold ETF. The fund has been managed by Vikram Dhawan since 2022. The fund aims to provide returns that closely correspond to the domestic price of gold, before expenses. It is benchmarked against the domestic price of gold.

The further details of the Gold BeES that you should be aware of are as follows:

Date of Listing	8-Mar-2007
AUM (₹ Cr.)	20,783.15
Price	₹79.51
Expense Ratio	0.80%

(Details as on 28-May-2025)

Now that you know what Gold BeES means, let’s quickly understand its working here.

How Gold BeES Works?

When you invest in any asset, the first thing that you must understand properly is how it works and generates returns. By knowing this, you can ensure that your investment is not just done in the right direction, but also that you gain from your investments. So, here is the working of the Gold BeES:

Every unit of Gold BeES is approximately equal to 0.01 grams of physical gold with a 99.5% purity. The fund manager invests in physical gold and other exchange traded gold derivatives, tracking price movements and ensuring good returns.
ETFs offer their units to investors, which are then traded on the NSE or BSE to ensure transparency. You need a demat and a trading account for this.
The BeES tracks the price of gold quite closely and ensures alignment with price movements consistently, resulting in low tracking error.
Since there is no physical gold involved, the investor is freed from the worry of storing it.
With a price of around ₹80, Gold BeEs allows new investors to invest in gold without much capital.

Here is a quick table comparing the returns of the Gold BeES to those of physical gold to better check its performance.

	1 Year Return (%)	3 Years Return (%)	5 Years Return (%)	Since Inception Return (%)
Nippon India ETF Gold BeES	29.73	20.37	13.82	12.37
Price of Gold	31.31	21.65	14.95	13.47

(Details as on 28-May-2025)

So, the Gold BeES matches or tracks the movement of gold prices with returns equivalent to what the physical gold investment might offer you. This makes the scheme perfect for investors seeking to diversify their portfolio with gold.

Risks Associated with Gold BeES

Gold BeES faces the risk of gold price volatility. This means its value can fluctuate sharply based on various factors, including:

Global gold prices
Currency movements
Economic or political events.

Though this is a liquid asset, there might be chances that the liquidity will be negatively impacted during extreme market conditions. This will make it harder to buy or sell at your desired price. Tracking error can increase during volatile market conditions, causing the fund’s returns to deviate from actual gold returns due to fund expenses and operational inefficiencies.

There’s also fund manager risk, as the ETF’s performance depends on the AMC’s efficiency. Changes in tax laws or regulations could impact returns in the future.

Understanding Gold ETFs

To understand Gold ETFs vs. Gold BeES, you must first know what each stands for. So, now that you know the meaning of Gold BeES, let us explore the Gold ETFs here.

Gold ETFs are the exchange traded funds for the purpose of investment in gold. These are traded on stock exchanges and aim to track the price of physical gold. The primary features of these funds are as follows:

These are listed on stock exchanges like the NSE and the BSE for trading.
These are held electronically, so there is no hassle of storage.
The funds track the price of physical gold.
Gold ETFs are liquid in nature. This means you can easily buy or sell them on stock exchanges without any hassle.
The Gold EFTs involve no additional charges like making charges or storage costs, which makes them cost-efficient.
These are good from the taxation point of view when held for a long duration.
Investors can start with a small investment amount compared to investing in physical gold.
Many financial institutions accept Gold ETFs as collateral for loans.
There are no entry or exit load charges, making transactions cost-effective.
Statutory auditors regularly audit the holdings and purity of gold held by Gold ETFs to ensure transparency and trust.

How Gold ETFs Work?

Before you invest in Gold ETFs, you must understand how they work as well. So, the fund works in a very simple manner with the aim of offering returns to the investors. Here are the details of working:

These are traded on the stock exchanges during the trading hours. You can either buy or sell Gold ETF units based on your financial goals.
Each unit represents a specific quantity of physical gold that the ETF holds either physically or through exchange traded derivatives.
When you sell a unit, you get the cash amount equal to the physical gold value of that unit credited to your account.
You would need to pay taxes on the amount that you earn based on certain conditions.

Though there are various Gold ETFs available in India, it is important to know the top ones. So, here are the top-performing funds that you can invest in:

Fund Name	Inception Year	AUM (₹ Cr.)	Price (₹)	1 Year Return (%)	3 Year Return (%)	5 Year Return (%)	Expense Ratio (%)
Axis Gold ETF	2010	1,660.77	80.27	28.20	22.16	14.1	0.56
Birla Sun Life Gold ETF	2011	1184.63	84.57	27.85	22.06	13.92	0.47
HDFC Gold ETF	2010	9562.90	82.15	27.97	22.04	13.96	0.59
ICICI Prudential Gold Exchange Traded Fund	2010	7294.75	82.06	27.91	22.14	14.02	0.50
Invesco India Gold Exchange Traded Fund Ltd.	2010	277.77	8380.95	28.27	22.31	14.17	0.55
Kotak Gold Exchange Traded Fund	2007	7416.14	80.25	27.82	22.07	14.00	0.55
Quantum Gold Fund	2008	312.56	79.37	27.95	22.07	13.89	0.78
UTI Gold Exchange Traded Fund Ltd.	2007	1983.11	80.90	28.89	22.55	14.03	0.46

(Details as on 28-May-2025)

To further understand GoldBeES vs Gold ETF properly, let us now consider the taxation part.

Taxation of Gold ETFs and Gold BeES in India (2025)

When you invest in any asset, you must know the taxation part as well. This will ensure that you are managing your fund in the best manner and gaining the optimum outcome as well. So, when it comes to Gold BeES vs Gold ETF, the following will give you an idea of how the taxation works:

Type	Short-Term Capital Gains (≤12 months)	Long-Term Capital Gains (>12 months)	Indexation	Other Taxes
Gold BeES	As per the income tax slab	12.5% flat	No	No wealth tax, STT, VAT, or sales tax
Gold ETFs (all AMCs)	As per the income tax slab	12.5% flat	No	No wealth tax, STT, VAT, or sales tax

Risks Associated with Gold ETFs

Gold ETFs in India share similar risks to those of Gold BeES. They are highly sensitive to gold price volatility and macroeconomic factors. Liquidity risk can be higher in ETFs with lower trading volumes, making it difficult to exit at favorable prices.

Tracking error may be more pronounced in ETFs with higher expense ratios or less efficient fund management. The reputation and operational strength of the AMC matter; less established fund houses may carry higher risk. Like Gold BeES, all gold ETFs are subject to regulatory and taxation changes, which could affect their attractiveness or returns over time.

Who Should Invest in Gold BeES or Gold ETFs?

If you are looking to diversify your portfolio and want exposure to gold without dealing with physical storage or making charges, these options are ideal. Gold BeES and Gold ETFs are best suited for:

Long-term investors looking for a safe hedge against inflation or currency fluctuations.
Beginners who want to start small as Gold ETFs have low market prices, which allows even small investors to invest in gold.
People who want the flexibility to buy or sell gold easily and quickly through their trading account.

How to Invest in Gold BeES or Gold ETF Using Pocketful?

You can invest in Gold BeEs or Gold ETF using Pocketful by following the steps mentioned below:

Visit the Pocketful website, click on ‘Open Demat Account’ and complete your KYC with PAN, Aadhaar, and bank details.
After successful verification, your account will be opened and you will get login credentials on email.
Login into Pocketful’s mobile application, transfer funds and search for the Gold ETFs or Gold BeES that you wish to invest in.
Enter the number of units you want to buy click on buy.
Track your investment regularly on the Pocketful’s user-friendly mobile application under your portfolio section.

Conclusion

Gold BeES vs Gold ETFs offers you a comparison between two investment tools for anyone looking to invest in gold digitally. While Gold BeES is a specific ETF offered by Nippon India, Gold ETFs represent a broader range of ETFs offered by multiple AMCs.

Your choice among the two depends on your investment size, fund preference, and low tracking error. With platforms like Pocketful, investing in gold has never been easier or more accessible. Take your first step toward building a balanced portfolio by adding digital gold the smart way. However, it is advised to consult a financial advisor before investing.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	Mutual Fund vs ETF. Are They Same Or Different?
2	What are ETFs? Are ETFs good for beginner investors?
3	ETF vs Index Fund: Key Differences You Must Know
4	How to Invest in ETFs in India – A Beginner’s Guide
5	What is Nifty BeES ETF? Features, Benefits & How to Invest?

Frequently Asked Questions (FAQs)

Is Gold BeES the same as Gold ETF?
Gold BeES is similar to other Gold ETFs with one major difference that Gold BeEs is only offered by Nippon India Mutual Fund, whereas Gold ETFs are a broader category and are offered by various AMCs with different expense ratios.
Can I invest in Gold BeES without a demat account?
No. You need both a demat and a trading account to invest in Gold BeES or any Gold ETF, as these are traded on stock exchanges.
Which is better for beginners – Gold BeES or Gold ETFs?
Gold BeES is better for beginners due to its low price and low tracking error.
Are Gold ETFs and Gold BeES backed by physical gold?
Both invest in 99.5% pure physical gold and track domestic gold prices. Their value moves closely with the market price of gold.
How is tax calculated on Gold BeES and Gold ETFs?
If held for 12 months or less, gains are taxed as per your income tax slab. If held for more than 12 months, a flat 12.5% long-term capital gains tax applies.

ETF vs Stock – Which One is the Better Investment Option?

Investment decisions today require more thought than ever before. There are many options in the market, but the right choice depends on investment goals, risk tolerance, and current economic conditions. Recently, due to volatile market conditions, investors have been interested in building safe and diversified investment portfolios. In such an environment, it has become important to know which option, ETF or stock can prove to be better in the current times.

In this blog, we will compare ETF and stocks as investment options and decide on which one is best, along with their advantages and disadvantages.

What is an ETF?

ETFs or exchange-traded funds are investment instruments that represent a mix of shares of several companies, bonds or other assets. They can be bought and sold on the stock exchange like a common share. The biggest advantage of investing in an ETF is that it is diversified – that is, investments are made in several companies or sectors simultaneously, which reduces the risk. Apart from this, it is easier to trade as they can be bought and sold throughout the day in the stock market at market prices.

Know More: Calculate returns on ETF investments.

There are several types of ETFs, such as:

Equity ETF: which invests in stocks of several companies.
Debt ETF: which invests in government or corporate bonds.
Gold ETF: which tracks the price of gold
Sectoral/Thematic ETF: which invests in a specific sector (e.g. IT, banks)
International ETF: which tracks foreign markets.

ETFs can be a better option for long-term investors, especially when low risk and stable returns are preferred.

What is Stock?

Stocks are a part of the investment world that gives investors an opportunity to directly take a stake in a company. When an investor buys shares of a company, he becomes a small owner of that company. This ownership makes him a partner in the company’s profits, losses and other important decisions.

Investing in stocks has the potential to deliver good returns, but it also carries a higher risk, as a company’s financial performance can have a direct impact on the share price and thus your investment. Market movements, economic conditions and the company’s internal strategy can affect stock prices.

There are many types of stocks, such as:

Blue-Chip Stocks: Large, stable, and reliable companies
Mid-Cap and Small-Cap Stocks: Fast-growing but relatively more risky companies
Growth Stocks: Companies which have the potential for rapid expansion
Dividend Stocks: Companies which regularly distribute a share of profits with its shareholders.

With all these options, it is important to start wisely in the stock market.

ETF vs Stock: Key Differences

When it comes to ETFs vs Stocks, there are fundamental differences between the two investment options and selecting between the two is impacted by the investor’s experience, goals, and risk appetite. Here are some key differences between the two that can help you make a better decision:

Parameter	Exchange traded Fund (ETF)	Stocks
Diversification	The investment is divided among many companies, so ETFs are well-diversified.	Your investment performance is dependent on a single company’s financial performance, which keeps the risk more concentrated.
Risk and Volatility	ETFs are less volatile, especially index-based ETFs.	Depends on the performance of the company, hence volatility is high.
Management	Most ETFs are passive, which do not require much monitoring.	Research and tracking are important while investing in individual stocks.
Liquidity	ETFs have high liquidity.	Some Stocks are directly affected by the performance of the individual company.
Ownership	Buying an ETF gives you ownership of units of ETF, not of a specific company.	Buying stock gives you a direct stake in the company concerned.
Expenses and Fees	It has a small expense ratio and brokerages and transaction charges apply.	Brokerage and transaction fees are charged.
Voting Rights	ETF holders generally do not have voting rights in companies.	Stockholders have the right to vote on company decisions.

It is clear from this comparison that both stocks and ETFs have their own strengths and limitations. While ETFs are about instant diversification, stocks offer the potential for higher returns.

Pros and Cons of Investing in ETFs

Pros of ETF	Cons of ETF
Having multiple stocks in a single ETF provides diversification, which reduces risk.	The potential for high returns is limited.
Low expense ratios, making them especially beneficial for passive investors.	The investor does not have complete control to decide which stocks to include.
A good option for the long term as there is no need for constant buying, selling and research.	Some thematic or sector ETFs may be more volatile.
Easy way to invest in international markets, gold, bonds etc.	Less popular ETFs may have higher buy-sell spreads, which increases costs.

Pros and Cons of Investing in Stocks

Pros of Stock	Cons of Stock
Investing in the right company can provide good returns in the long term.	Poor performance of the company may result in a sharp decline in the value of the investment.
Shareholders get ownership and voting rights in the company.	The risk is higher compared to ETFs because there is less diversification.
There is a possibility of getting returns from both dividends and capital gains.	Company reports, market and sector information have to be constantly monitored.
You have complete control over your investments in stocks, buy or sell whenever you want.	Price volatility is high, which may cause stress or confusion among new investors.

Stocks or ETFs: Which is Better?

Which is better between ETFs vs Stocks depends entirely on the investor’s preferences and strategy. If your investment goal is stable growth and low risk over the long term, ETFs are the preferred investment option. They offer instant diversification at low cost, which is beneficial for beginner investors.

On the other hand, if an investor understands the market movements, has the time to do research, and wants the higher returns, then investing in individual stocks is a better option. However, investing in individual stocks can be risky and one has to face higher volatility.

Common Mistakes to Avoid While Choosing Between Stock and ETF

Common mistakes made while investing in stocks and ETFs are mentioned below:

Making decisions based only on short-term returns: Many investors invest only by considering the recent performance or chart patterns and ignore long-term potential and risk. Whether it is a stock or an ETF, it is important to pay attention to future growth along with the tracking error in the ETF and past financial performances for stocks.
Ignoring expense ratio and fee structure: Investing in ETFs incurs fees known as expense ratio, which can affect returns over time. At the same time, frequent trading in stocks can increase brokerage charges.
Overlapping in portfolio: Investing in both ETFs and stocks is good, but at times investors invest in the same company through ETFs as well purchase their shares, which reduces diversity and increases risk.
Investing on Unverified Investment Tips: Investing on the advice of a friend, social media or an influencer without understanding your financial situation and goals can be risky. Conduct your own research or speak to a financial advisor before investing in ETFs and stocks.

Conclusion

Both ETFs and stocks have their own advantages and risks. While ETFs come with lower risk, diversification, and less effort, stocks offer more control with the potential for higher returns.

Deciding which option is better depends on the investor’s risk appetite, financial goals, and availability of time. It is important to evaluate your financial position and goals before investing. With the right strategy and information, good returns can be obtained from both the options.

Frequently Asked Questions (FAQs)

Which is safer: an ETF or Stock?
ETF is considered more safe because it invests in many companies, which reduces the risk.
Can beginners start with ETFs?
Yes, ETFs are a good option for beginners as they require less research and provide diversification.
Is it possible to have both an ETF and stocks in a portfolio?
Absolutely, balancing the portfolio by investing in both is a wise move.
Are ETFs suitable for long-term investment?
Yes, ETFs are stable and low-risk investment options for the long term.
Can I trade ETFs like regular stocks?
Yes, ETFs can be traded on an exchange just like stocks.

May 28, 2025

इंट्राडे ट्रेडिंग का मतलब है एक ही दिन के भीतर शेयर को खरीदना और बेचना। इस प्रक्रिया में निवेशक का उद्देश्य होता है दिनभर के उतार-चढ़ाव का फायदा उठाकर मुनाफा कमाना। यानी जो शेयर सुबह खरीदा गया, उसे उसी दिन शाम को बाजार बंद होने से पहले बेच देना होता है।

इस ब्लॉग में हम इंट्राडे ट्रेडिंग के साथ-साथ इसके लाभ, जोखिम और रणनीतियों के बारे में विस्तार से बताएंगे।

इंट्राडे ट्रेडिंग क्या होती है? – Intraday Trading Kya Hoti Hai?

“इंट्राडे” शब्द का मतलब होता है “दिन के अंदर”। यह ट्रेडिंग का वो तरीका है जिसमें लंबी अवधि का इंतज़ार नहीं किया जाता और खरीद और बिक्री एक ही दिन में की जाती है। यहाँ तेजी से फैसले लेना और बाजार की दिशा को समय रहते समझना बेहद जरूरी होता है।

इस तरह की ट्रेडिंग में सफल होने के लिए तकनीकी ज्ञान, चार्ट पढ़ने की क्षमता और सही एंट्री–एग्ज़िट पॉइंट्स की समझ जरूरी होती है। आमतौर पर इसमें मूविंग एवरेज, आर.एस.आई., वॉल्यूम जैसे इंडिकेटर का इस्तेमाल किया जाता है ताकि छोटे-छोटे प्राइस मूवमेंट्स का सही अंदाज़ा लगाया जा सके।

हालाँकि, इंट्राडे ट्रेडिंग में मुनाफे की संभावना होती है, लेकिन साथ ही इसमें जोखिम भी अधिक होता है। इसलिए यह ज़रूरी है कि ठोस स्ट्रैटेजी और रिस्क मैनेजमेंट के बिना इंट्राडे ट्रेडिंग न करें।

यह भी पढ़ें:15 बेस्ट शेयर मार्केट बुक्स हिंदी में | Stock Market Books Hindi

इंट्राडे ट्रेडिंग का एक आसान उदाहरण

एक ट्रेडर सुबह ITC के 150 शेयर ₹320 के भाव पर खरीदता है, इस उम्मीद के साथ कि कीमत बढ़ेगी। जब मार्केट में तेजी आती है और प्राइस ₹335 तक पहुंच जाता है, तो वह अपने सारे शेयर बेच देता है। इस तरह उसे प्रति शेयर ₹15 का लाभ होता है, यानी कुल ₹2,250 का मुनाफा। इसमें से ब्रोकरेज और अन्य चार्जेज़ कम किए जाते हैं।

अगर कीमत नीचे गिरकर ₹310 तक पहुंच जाती है, तो ट्रेडर अपने नुकसान को सीमित करने के लिए तुरंत शेयर बेच सकता है। इस उदाहरण से साफ दिखता है कि इंट्राडे ट्रेडिंग में छोटे-छोटे दामों में होने वाले बदलावों को फटाफट समझकर फैसले लेने पड़ते हैं।

ध्यान रहे, इंट्राडे ट्रेडिंग में सभी ट्रांजैक्शन्स उसी दिन निपटाने होते हैं चाहे मुनाफा हो या नुकसान। साथ ही, मार्जिन के जरिए ट्रेडर को अपने निवेश की तुलना में ज्यादा पैसे से ट्रेड करने का मौका मिलता है, जिससे लाभ तो बढ़ता है लेकिन जोखिम भी। इसलिए सावधानी और समझदारी बहुत जरूरी होती है।

इंट्राडे ट्रेडिंग शुरू करने के आसान कदम

आप नीचे उल्लिखित प्रक्रिया का पालन करके इंट्राडे ट्रेडिंग शुरू कर सकते हैं:

डीमैट और ट्रेडिंग अकाउंट खोलना : इंट्राडे ट्रेडिंग शुरू करने के लिए सबसे ज़रूरी होता है एक अच्छा डीमैट और ट्रेडिंग अकाउंट खोलना। ऐसा अकाउंट होना चाहिए जिसमें ब्रोकरेज चार्ज कम हों और प्लेटफॉर्म यूजर-फ्रेंडली हो। पॉकेटफुल में ये सारी सुविधाएं मिलती हैं, जिससे मार्केट की हर हलचल पर जल्दी डिसीजन लेना आसान हो जाता है।
पेपर ट्रेडिंग या डेमो पर प्रैक्टिस करना : असली पैसे से ट्रेडिंग करने से पहले, बिना किसी डर के पेपर ट्रेडिंग या डेमो अकाउंट पर हाथ आज़माना चाहिए। डेमो अकाउंट नए ट्रेडर्स के लिए बढ़िया है क्योंकि इससे मार्केट की चाल समझ में आती है और असली पैसा लगाने से पहले गलतियां कम हो जाती हैं।
बेसिक चार्ट्स और ट्रेडिंग पैटर्न समझना : मार्केट के ट्रेंड को पकड़ने के लिए चार्ट पढ़ना सीखना जरूरी है। ‘हेड एंड शोल्डर’, ‘डबल टॉप’, ‘ट्रेंडलाइन ब्रेक’ जैसे बेसिक पैटर्न को समझना Pocketful के ट्रेडिंग टूल्स से आसान होता है, जिससे सही टाइम पर ट्रेड करना संभव हो जाता है।

इंट्राडे ट्रेडिंग के लिए सही समय का चयन

भारतीय शेयर मार्केट रोजाना सुबह 9:15 बजे खुलता है और शाम 3:30 बजे बंद हो जाता है।

इंट्राडे ट्रेडिंग के लिए सुबह का टाइम : सुबह 9:15 से 10:30 तक का वक्त सबसे ज़्यादा एक्टिव होता है। इस दौरान मार्केट में बड़ी तेजी से कीमतें ऊपर-नीचे होती हैं, जिससे प्रॉफिट के अच्छे मौके मिलते हैं।
दोपहर का टाइम : लगभग 11 बजे से दोपहर 2:30 तक बाजार में उतनी हलचल नहीं होती। इस वजह से ट्रेडिंग भी थोड़ी धीमी हो जाती है।
शाम के आखिरी घंटे : दोपहर 2:30 से 3:30 बजे तक ट्रेडर्स अपने दिन के पोजीशन्स को बंद करने लगते हैं, इसलिए मार्केट फिर से एक्टिव हो जाता है।
इंट्राडे ट्रेडिंग का एक जरूरी नियम : दिन भर की ट्रेडिंग में जो भी पोजीशन्स लिए जाते हैं, उन्हें दोपहर 3:30 बजे से पहले क्लोज़ करना जरूरी होता है, ताकि कोई ओपन पोजीशन अगले दिन के लिए न रह जाए।

इंट्राडे ट्रेडिंग में लगने वाले शुल्क और खर्चे

इंट्राडे ट्रेडिंग करते समय सिर्फ प्राइस मूवमेंट पर ही ध्यान नहीं देना होता, बल्कि हर ट्रांज़ैक्शन पर लगने वाले चार्जेस भी प्रॉफिट या लॉस को प्रभावित करते हैं।

ब्रोकरेज चार्ज: यह हर ब्रोकर का अपना होता है। कुछ ब्रोकर्स फ्लैट ₹20 प्रति ट्रेड लेते हैं, तो कुछ ट्रेड वैल्यू का एक छोटा प्रतिशत काटते हैं।
STT (सिक्योरिटीज ट्रांसैक्शन टैक्स): सिर्फ सेल साइड पर लगता है और इंट्राडे के लिए इसकी दर 0.025% होती है।
एक्सचेंज ट्रांजैक्शन चार्ज: यह चार्ज NSE या BSE के हिसाब से अलग-अलग होता है।
GST (गुड्स और सर्विसेज टैक्स): ब्रोकरेज और एक्सचेंज चार्जेस पर 18% की दर से लागू होता है।
SEBI चार्ज और स्टैम्प ड्यूटी: ये मामूली होते हैं, लेकिन हर ऑर्डर पर लागू होते हैं।

अगर दिन में कई बार ट्रेडिंग की जा रही हो (जैसे हाई-फ्रिक्वेंसी ट्रेडिंग में होता है), तो यह सारे खर्च मिलकर कुल प्रॉफिट को काफी कम कर सकते हैं। इसलिए सिर्फ प्राइस पर नहीं, इन चार्जेस पर भी नजर रखना ज़रूरी होता है।

यह भी पढ़ें: भारत में टॉप 10 सबसे अधिक देने वाले डिविडेंड यील्ड स्टॉक

इंट्राडे ट्रेडिंग बनाम डिलीवरी ट्रेडिंग: क्या है बेहतर?

मापदंड	इंट्राडे ट्रेडिंग	डिलीवरी ट्रेडिंग
समय सीमा	एक ही दिन में खरीदना और बेचना होता है	शेयर खरीदे जाते हैं और लंबे समय तक रखे जाते हैं
रिस्क लेवल	हाई रिस्क, लेकिन जल्दी मुनाफा कमाने का मौका	लो रिस्क, लेकिन मुनाफा धीरे-धीरे आता है
ब्रोकरेज चार्ज	अधिक हो सकते हैं, क्योंकि बार-बार ट्रांजैक्शन होते हैं।	अपेक्षाकृत कम, क्योंकि ट्रेड कम बार होते हैं।
फोकस	प्राइस की छोटी-छोटी मूवमेंट्स पर निगरानी ज़रूरी	कंपनी के फंडामेंटल और ग्रोथ पर फोकस रहता है
टाइम और ध्यान की जरूरत	दिनभर एक्टिव रहना पड़ता है, टाइम इन्वेस्टमेंट ज्यादा है	कम निगरानी में भी मैनेज किया जा सकता है
इन्वेस्टमेंट स्ट्रैटेजी	शॉर्ट-टर्म मूवमेंट्स से फायदा उठाना	लॉन्ग टर्म ग्रोथ और वेल्थ बिल्डिंग पर फोकस
लिक्विडिटी	बहुत हाई, दिन में कई बार एंट्री-एग्ज़िट संभव	कम, क्योंकि लंबे समय तक होल्ड करना होता है
किसके लिए बेहतर?	जिनके पास समय है, रिस्क झेल सकते हैं और मार्केट की समझ रखते हैं	जो लॉन्ग टर्म निवेश में भरोसा रखते हैं और स्थिरता पसंद करते हैं

इंट्राडे ट्रेडिंग के लिए उपयोगी संकेतक

इंट्राडे ट्रेडिंग में सही समय पर एंट्री और एग्ज़िट लेना ही गेम बदलता है। इसके लिए टेक्निकल चार्ट्स पढ़ना जितना ज़रूरी है, उतना ही जरूरी है कुछ खास संकेतकों (Indicators) को समझना। ये संकेतक मार्केट के मूवमेंट को पकड़ने में मदद करते हैं।

मूविंग एवरेज : यह संकेतक पिछले कुछ समय की औसत कीमत दिखाता है। यह यह बताने में मदद करता है कि स्टॉक ऊपर की दिशा में है या नीचे जा रहा है। खासतौर पर 20-Day या 50-Day मूविंग एवरेज इंट्राडे में काफी उपयोगी होते हैं।
रिलेटिव स्ट्रेंथ इंडेक्स : RSI यह बताता है कि कोई स्टॉक ओवरबॉट है या ओवरसोल्ड। इसका उपयोग करके यह समझा जा सकता है कि अब कीमत में रुकावट आएगी या फिर कोई नया ट्रेंड शुरू हो सकता है।
बोलिंजर बैंड्स : यह इंडिकेटर वोलैटिलिटी को पकड़ने में मदद करता है। जब प्राइस बैंड से बाहर जाता है, तो संभावित ब्रेकआउट या रिवर्सल का इशारा मिलता है।
वॉल्यूम वेटेड एवरेज प्राइस : VWAP बताता है कि दिनभर में शेयर का औसत मूल्य वॉल्यूम के साथ क्या रहा। यह संकेत करता है कि प्राइस अभी सस्ता है या महंगा।
एमएसीडी (MACD) : MACD इंडिकेटर दो मूविंग एवरेज के बीच का अंतर दिखाता है और मार्केट में ट्रेंड की ताकत समझने में मदद करता है।

इन संकेतकों का इस्तेमाल अकेले नहीं, बल्कि एक-दूसरे के साथ मिलाकर करना ज्यादा सटीक परिणाम देता है।

इंट्राडे ट्रेडिंग के मुख्य फायदे

इंट्राडे ट्रेडिंग के नीचे सूचीबद्ध कई लाभ हैं:

इंट्राडे ट्रेडिंग उन लोगों के लिए फायदेमंद है जो हर दिन बाजार की चाल पर नज़र रखते हैं और तेज़ फैसले लेने में माहिर हैं।
कम पूंजी में शुरुआत संभव : मार्जिन की सुविधा से ट्रेडर कम पूंजी में भी बड़े सौदे कर सकते हैं। यानी ₹10,000 के निवेश से भी ₹50,000 तक की पोज़िशन ली जा सकती है।
तेज़ मुनाफे की संभावना : दिनभर के छोटे उतार-चढ़ाव को पकड़कर कुछ ही घंटों में मुनाफा कमाया जा सकता है। यह लंबी अवधि की ट्रेडिंग के मुकाबले तेज़ रिटर्न देने वाला तरीका है।
लिक्विडिटी का फायदा : ज्यादातर इंट्राडे ट्रेडिंग लिक्विड स्टॉक्स में होती है, जिनमें खरीदने और बेचने में देर नहीं लगती। इससे ट्रेडिंग का फ्लो बना रहता है और एग्ज़िट आसान होता है।
ओवरनाइट रिस्क नहीं होता : क्योंकि सभी पोज़िशन उसी दिन बंद करनी होती हैं, इसलिए किसी खबर या घटना जिसकी घोषणा बाजार समय के बाद की जाती है उसका असर ट्रेड पर नहीं पड़ता।
कम ट्रांजैक्शन शुल्क : डिलीवरी के मुकाबले इंट्राडे में ब्रोकरेज और अन्य चार्जेज कम होते हैं, जिससे नेट प्रॉफिट बढ़ सकता है।

इंट्राडे ट्रेडिंग में शामिल जोखिम

इंट्राडे ट्रेडिंग जितनी तेज़ मुनाफा दिला सकती है, उतनी ही तेज़ नुकसान भी करा सकती है खासकर तब, जब निर्णय जल्दबाज़ी में लिए जाते है।

तेज़ उतार-चढ़ाव से नुकसान का खतरा : मार्किट में पलभर में ट्रेंड बदल सकता है। अगर ट्रेंड के उलट पोज़िशन ली गई हो, तो बड़ा नुकसान हो सकता है।
भावनाओं पर नियंत्रण न होना : जल्द मुनाफा कमाने के चक्कर में कई बार लोग डर या लालच में गलत फैसले ले लेते हैं, जिससे लगातार घाटा हो सकता है।
ओवर ट्रेडिंग की आदत : हर छोटे मूवमेंट पर बार-बार ट्रेड करना, बिना स्पष्ट सेटअप के, पूंजी को धीरे-धीरे खत्म कर सकता है।
समय और स्क्रीन पर फोकस की मांग : इंट्राडे में हर मिनट की चाल मायने रखती है। थोड़ी भी चूक या ध्यान भटकना, गलत एंट्री या लेट एग्ज़िट का कारण बन सकता है।
ज़्यादा ट्रांजैक्शन शुल्क : इंट्राडे में ब्रोकरेज और अन्य चार्जेज ज़्यादा होते हैं, जिससे नेट प्रॉफिट कम हो सकता है।

इंट्राडे ट्रेडिंग में मुनाफा है, लेकिन इसके साथ अनुशासन, अनुभव और ठंडे दिमाग की भी ज़रूरत होती है।

इंट्राडे ट्रेडिंग के लिए असरदार रणनीतियाँ

इंट्राडे में सफल होने के लिए चार्ट्स को पढ़ना जितना ज़रूरी है, उतना ही ज़रूरी है सही तकनीकों को समय पर इस्तेमाल करना। नीचे कुछ प्रमुख रणनीतियाँ दी गई हैं, जो ट्रेडिंग में प्रॉफिट दिला सकती हैं:

ब्रेकआउट ट्रेडिंग : यदि कोई स्टॉक लंबे समय तक एक दायरे में ट्रेड कर रहा हो और अचानक सपोर्ट या रेसिस्टेंस लेवल को पार कर जाए, तो उस क्षण एंट्री ली जाती है। इसमें बाजार की दिशा में आने वाली नई चाल का फायदा उठाने की कोशिश होती है।
स्कैल्पिंग : यह हाई-फ्रीक्वेंसी रणनीति है, जहां मिनटों में दर्जनों ट्रेड लिए जाते हैं। इसमें उद्देश्य होता है हर छोटे प्राइस मूवमेंट से सीमित लेकिन लगातार मुनाफा कमाना। यह स्ट्रेटेजी तेज़ फैसले और सटीक एग्ज़ीक्यूशन की मांग करती है।
रिवर्सल ट्रेडिंग : जब किसी शेयर की प्रॉफिट बार-बार एक निश्चित रेंज में घूम रही हो, तब ट्रेंड पलटने के संकेतों को पहचानकर उल्टी दिशा में ट्रेड करना इस स्ट्रेटेजी का मूल है। इसमें जोखिम थोड़ा ज़्यादा हो सकता है, लेकिन अनुभव के साथ इसकी सफलता की संभावना भी बेहतर होती है।

हर रणनीति की सफलता निर्भर करती है बाज़ार की स्थिति, अनुभव और अनुशासन पर। बिना विश्लेषण के ट्रेड करना एक रणनीति नहीं, बल्कि एक जोखिम है।

अधिक जानें – पेनी स्टॉक्स क्या हैं? निवेश के लाभ, जोखिम, और सर्वश्रेष्ठ स्टॉक सूची

इंट्राडे ट्रेडिंग और कर का गणित

आपको इंट्राडे ट्रेडिंग के कर निहितार्थों के बारे में पता होना चाहिए, जैसे कि:

इंट्राडे ट्रेडिंग से होने वाला लाभ भारत में व्यावसायिक आय माना जाता है। इसका मतलब यह है कि इस आय पर कुल वार्षिक इनकम के अनुसार सामान्य टैक्स स्लैब के तहत टैक्स देना होता है।
ट्रेडिंग में खर्च किए गए सारे खर्चे जैसे ब्रोकरेज फीस, सिक्योरिटी ट्रांजैक्शन टैक्स (STT), और अन्य लेनदेन शुल्क आय से घटाए जा सकते हैं। इससे टैक्स देयता कम हो जाती है।
अगर ट्रेडिंग में नुकसान होता है, तो उस नुकसान को उसी वित्तीय वर्ष की अन्य व्यावसायिक आय से सेट ऑफ किया जा सकता है। यदि पूरे वर्ष नुकसान होता है, तो इसे अगले आठ सालों तक आगे भी बढ़ाया जा सकता है, ताकि भविष्य में मुनाफे से सेट ऑफ किया जा सके।
टैक्स नियम समय-समय पर बदलते रहते हैं, इसलिए सही टैक्स प्लानिंग के लिए किसी प्रमाणित चार्टर्ड अकाउंटेंट या टैक्स सलाहकार से सलाह लेना आवश्यक है। इससे न केवल टैक्स की सही गणना होगी, बल्कि ट्रैडिंग पर फोकस भी बना रहेगा।

इंट्राडे ट्रेडिंग का सारांश

इंट्राडे ट्रेडिंग में दिन के अंदर ही शेयर खरीदने और बेचने का काम होता है, जिससे जल्दी मुनाफा कमाने का मौका मिलता है। हालांकि, यह काम धैर्य, समझदारी और सही रणनीति के बिना जोखिम भरा हो सकता है। जो ट्रेडर्स मार्केट की तेजी से बदलती परिस्थितियों को समझकर तेजी से फैसले लेते हैं, वे इस क्षेत्र में सफलता पा सकते हैं।

सही शुरुआत के लिए जरूरी है कि मार्केट की बेसिक जानकारी, चार्ट्स, और ट्रेडिंग टूल्स की समझ हो। जोखिम को कम करने के लिए स्टॉप लॉस का इस्तेमाल करें और बिना योजना के ट्रेड न करें। धैर्य और अनुशासन के साथ अभ्यास करते हुए अनुभव हासिल करें।

इस तरह, इंट्राडे ट्रेडिंग में उचित तैयारी और सही मनोबल से अच्छा मुनाफा संभव है, लेकिन बिना तैयारी के नुकसान भी हो सकता है। इसलिए हमेशा सीखने की प्रक्रिया जारी रखें और जिम्मेदारी से ट्रेडिंग करें।

इंट्राडे ट्रेडिंग से जुड़े सवाल और उनके जवाब (FAQs)

इंट्राडे ट्रेडिंग में ट्रेड कितने बजे तक बंद करना होता है?
सभी पोजिशन 3:30 PM तक बंद करनी होती हैं।
क्या इंट्राडे ट्रेडिंग से रोज़ाना कमाई की जा सकती है?
हाँ, लेकिन इसमें रिस्क होता है और मार्केट की अच्छी समझ जरूरी है।
इंट्राडे और डिलीवरी ट्रेडिंग में क्या अंतर है?
इंट्राडे में शेयर उसी दिन बेचना होता है, डिलीवरी में शेयर होल्ड किए जाते हैं।
क्या इंट्राडे ट्रेडिंग टैक्सेबल होती है?
हाँ, इसे स्पेकुलेटिव बिज़नेस इनकम माना जाता है और टैक्स स्लैब के अनुसार टैक्स लगता है।
नए ट्रेडर्स के लिए कौन-सी रणनीति बेहतर है?
ब्रेकआउट और ट्रेंड फॉलोइंग जैसी सिंपल स्ट्रेटेजीज़ से शुरुआत करना बेहतर है।
क्या स्टॉप लॉस ज़रूरी है?
हाँ, ये बड़े नुकसान से बचाने में मदद करता है।

What Are Corporate Bonds?

In today’s dynamic investment landscape, investors have access to a wide range of opportunities, from equities to cryptocurrencies. However, these investments are not the most ideal for investors who want as little volatility in their portfolio as possible. Therefore, for such investors, corporate bonds are becoming a popular investment choice, as they have a moderate risk-return profile.

In this blog, we will explain all the concepts related to corporate bonds, including their types, advantages, risks, etc.

What is a Corporate Bond?

A Corporate Bond is a debt instrument that is issued by firms to raise funds. Investors can buy bonds from the firm and can lend money to the firm for a particular purpose. In exchange, the company will give periodic interest payments or coupon payments, and at the end of the period, the company returns the bond’s principal.

In other words, we can also say that whenever you buy a bond, it means you are lending money to the company, and in return for this, the company will repay you regular interest at a pre-determined interval along with return of principal at the end of the loan tenure. Moreover, corporate bonds yield a higher interest rate compared to government bonds.

Read Also: What are Bond Yields?

Features of Corporate Bonds

The key features of corporate bonds are as follows:

Higher Returns: Corporate bonds generally offer higher returns when compared to government bonds.
Liquidity: Corporate bonds are listed on the stock exchange but may have low liquidity.
Interest: Corporate bonds offer a fixed interest rate, which can be a regular source of income for investors.
Risk: Corporate bonds generally carry credit risk, which means the company may delay or default on interest and principal payments.
Maturity: The duration of corporate bonds ranges from short-term to long-term.

Types of Corporate Bonds

There are various types of corporate bonds available in the market; a few of these types are mentioned below:

1. Secured Bonds

These bonds are backed by certain assets which are kept as collateral. If the issuing company defaults, the assets can be claimed by the investors.

2. Unsecured Bonds

These are bonds that are not secured against any form of collateral. Hence, they are riskier than the secured bonds, as they are dependent on the issuer’s creditworthiness.

3. Fixed Interest Rate

These bonds offer a fixed interest rate and pay a fixed amount of interest throughout the term.

4. Floating Interest Rate Bonds

The interest rates of these bonds fluctuate with the market rates and are reset periodically.

5. Convertible Bonds

The bonds which can be converted into the equity shares of the company after a defined period are known as convertible bonds.

6. Non-Convertible Bonds

The bonds which cannot be converted into equity shares are known as non-convertible bonds.

7. Callable Bonds

In this kind of bond, the company has the privilege to redeem the bonds before maturity. This facility is usually availed by companies when the overall interest rates declines.

9. Putable Bonds

These bonds provide investors the right to sell the bond back to the issuer before maturity.

10. Zero Coupon Bond

These bonds do not pay periodic interest; they are issued at a discount to their face value and redeemed at face value at maturity

Benefits of Investing in Corporate Bonds

The significant benefits of investing in corporate bonds are as follows:

High Returns: Corporate bonds generally offer higher interest rates than any other government bond, compensating for the higher credit risk. Hence, investors who are willing to take risks in order to get the extra returns can opt for investing in such bonds.
Passive Income: The issuer pays interest payments in the form of coupons to the investors at regular intervals, usually semi-annually to annually. It can be a good source of passive income for investors.
Capital Protection: Investing in corporate bonds is usually safer than investing in equity as in the event of liquidation bondholders have a higher claim on assets than equity shareholders.

Risk of Investing in Corporate Bonds

There are several risks involved while investing in corporate bonds, a few of which are mentioned below:

Credit Risk: This is the most prominent risk when investing in a corporate bond as the issuer might fail to make the interest or principal payment because of any financial trouble.
Liquidity Risk: Most of the corporate bonds have extremely low liquidity, which makes it difficult for buyers and sellers to execute their trade in the secondary market.
Inflation Risk: If inflation rises over time then the coupon payments based on lower interest rate offered by your corporate bond will not be able to beat inflation.
Reinvestment Risk: When the corporate bond matures, you will get the redemption amount, including the principal and interest. Reinvestment risk refers to the possibility that proceeds from a maturing bond may have to be reinvested at a lower interest rate. This generally happens when the interest rates have dropped.

Factors Influencing the Price of Corporate Bonds

There are various factors which significantly impact the prices of corporate bonds; a few of such factors are as follows:

Credit Rating: There are various credit rating agencies which regularly monitor the creditworthiness of the issuer; hence, if they downgrade their rating because of any financial trouble in the company, the prices of the corporate bond will fall.
Interest Rate: The market interest rates play a major role in determining the price of a corporate bond. If the interest rate rises, the prices of the existing bonds will decrease.
Inflation: An increased inflation rate can decrease the real return of the bonds, thereby making them less desirable to invest in; thus ultimately resulting in a decline in prices of such corporate bonds.

How to Invest in Corporate Bonds?

There are various ways through which one can invest in corporate bonds; a few of such ways are mentioned below:

Primary Market: Bonds are issued for the first time in the primary market, hence, an investor can purchase them directly from the issuer.
Secondary Market: You can sell your corporate bonds in the secondary market through brokers, financial institutions or online platforms. Some of the corporate bonds are listed on the stock exchange by the issuing company to provide liquidity to the investors. However, due to low liquidity it may be difficult to purchase them easily.
Mutual Funds: Debt mutual funds invest in corporate bonds and are known as corporate bond funds. One can easily invest in these funds through SIP and Lumpsum.

Conclusion

On a final note, corporate bonds are suitable for investors who want less volatility in their portfolios and want regular income. However, the corporate bonds are not completely safe. There are factors such as interest rates, credit ratings, and economic conditions which may have an impact on the returns of corporate bonds. Hence, before making any investment decision, one should consult his/her financial advisor, investment horizon, as well as risk profile.

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5	Benefits of Investing in Bonds

Frequently Asked Questions (FAQS)

Who is allowed to invest in corporate bonds?
Anyone can invest in corporate bonds; however, investment in corporate bonds is appropriate for risk-averse investors who are looking for a steady source of income.
What risks are involved with corporate bond investment?
Investment in corporate bonds involves several risks, like liquidity risk, credit risk, inflation risk, etc.
How can I sell a corporate bond before maturity?
Some of the corporate bonds are listed on the Indian Stock Exchange but have low liquidity. You can sell your corporate bonds in the secondary markets through brokers, financial institutions and other online platforms.
Which is the safest corporate bond based on credit ratings?
Based on the credit ratings, AAA-rated bonds are generally considered safest, followed by AA, A, etc.

May 27, 2025

Benefits of Investing in Bonds

One of the most important advantages investing in bonds offers, especially in today’s volatile economy, is portfolio diversification. While most investment news is covered up by stocks, bonds offer unique benefits that provide solace and predictable returns aiding in the diversification of the portfolio.

In this blog, we will further understand the benefits of investing in bonds and see how it can improve and protect your investment portfolio.

Reasons to Invest in Bonds

Bonds are said to be one of the safest investment avenues for people who are seeking stability and consistency in their portfolio performance. Bonds are debt instruments where the investor (bond buyer) lends money to the bond issuing entity that can either be a government or corporation in exchange of interest payments at regular intervals and the return of principal amount at maturity.

When you buy a bond you become a creditor to the issuer as you get the principal amount at the time of maturity along with regular interest payments or coupon payments. Coupons are generally distributed annually or semi-annually providing you a risk-free stable income.

Top Benefits of Investing in Bonds

A list of top benefits of investing in bonds are:

1. Stable and Predictable Income

People who invest in bonds enjoy the benefits of steady income. Like clockwork, bonds pay fixed interest at pre-defined intervals and this makes them suitable for retirees or anyone looking for a passive income source. Most of the government and corporate bonds in India offer interest rates between 8% to 11% per annum.

2. Capital Preservation

Bonds are excellent for preserving capital given that they repay your principal at the set maturity date. These are particularly suitable for those wanting to avoid the ups and downs of equity markets or nearing retirement. While you may face wild fluctuations in investment value when it comes to stocks, bonds are less volatile and provide more security.

3. Portfolio Diversification

Bonds mitigate risk and adding them to your portfolio can prove beneficial. Since bonds are not correlated to equity returns, they lower overall portfolio risk, providing protection during stock market slumps. You can invest in bonds issued by different types of issuers such as government, corporate, or municipal to further diversify your portfolio.

4.Tax Benefits

In India, some bonds provide tax-free returns. For instance, certain government-issued bonds offer tax-free interest income, making them popular among investors.

5. Aids in Nation-Building and Development of Businesses

Purchasing government bonds helps you contribute to the funding of infrastructure projects like building roads, schools, and bridges. Corporate bonds contribute to business growth, rise in employment opportunities and economic development.

6. Shield Against Inflation

Certain types of bonds, such as inflation-indexed bonds adjust the maturity amount according to inflation, which protects investors against inflation. This maintains the buying power of the returns earned.

Read Also: What are Bond Yields?

Things to Consider Prior to Making Investments in Bonds

Like many other forms of investments, bonds also come with risks that have to be considered beforehand. While their reputation may suggest safety, there is a lot more under the surface. The most prominent risks to consider are :

1. Interest Rate Risk

Interest rates and bond prices have an inverse relationship, meaning that when interest rates increase, prices of existing bonds tend to decrease. This happens due to new bonds offering better yields, thus lowering the value of older bonds in the market.

2. Credit Risk (Default Risk)

This is the risk describing a scenario in which the bond issuer might fail to give interest payments or repay the principal amount at maturity. Bonds issued by famous companies and governments are safer, while corporate or junk bonds carry a higher credit risk.

Tip: Use the bonds credit rating from CRISIL, ICRA, etc to analyse the credit risk of the bond. They all provide reliable ratings and can help you make a better investment decision.

3. Inflation Risk

Inflation is referred to as a general price rise in an economy, this means that with time the price of goods and services increase leading to a decline in the purchasing power of money. In other terms, each rupee will buy less amount of goods and services today than in the past.

In case inflation rate shoots up sharply, then the bond returns will be lower in real sense. Example : If a bond pays 5% interest every year but inflation is 6%, then your real return is negative.

4. Liquidity Risk

The bonds may have been listed on the exchange but there may be no liquidity, which means that there may be no buyers at the time when you wish to sell and vice-versa. If you value liquidity, stick with government bonds or high-rated corporate bonds.

5. Call Risk

Certain bonds have a call option, which allows the issuer to retire a bond before its maturity date, usually if interest rates decrease. This is a plus for the issuer, but a disadvantage for investors who lose potential interest earnings and now may want to reinvest the amount at reduced interest rates.

Some popular bonds that Indian investors can invest in are as follows :

1. Government Bonds (G-Sec) – These are low-risk bonds that are issued by the Central Government and are considered the safest investment option.

2. Corporate Bonds – These bonds are issued by the private companies to raise funds/capital and these bonds typically offer high yields due to credit risk associated with them.

3. Tax Free Bonds – The interest earned by the bondholder is exempt from taxation in these bonds.

Conclusion

All investors can enhance their investment portfolios by investing in bonds. These securities provide numerous benefits, such as stable income, protecting capital, and portfolio diversification. Even though their returns are often lower than equities, bonds are less risky and provide steady income to conservative investors. Understanding the various benefits and factors affecting bond investments allows investors to align their investment decisions with their financial aspirations. It is advised to consult a financial advisor before investing.

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Frequently Asked Questions (FAQs)

What is the primary purpose of investing in bonds?
The main goal is earning consistent income through interest payments and safeguarding capital by getting the principal amount back upon maturity.
What is the difference between bonds and stocks?
Bonds are a form of debt instrument offering investors fixed interest payments and return of principal on maturity. Whereas, stocks signify ownership in a company and may provide dividends and capital gains.
Is it a good idea to invest in bonds for the short term?
Bonds with shorter maturities do exist, which could be a good idea for risk averse investors that are looking for stable returns and high liquidity. However, compared to long term bonds their returns will be lower.
Is it possible for bond investments to decrease in value?
Yes, bond investments can decrease in value as a result of shifts in interest rates, credit risk, and other market forces. These factors can result in potential capital losses if a bond is sold prior to its maturity date.
What is your recommended course of action for someone interested in starting to invest in bonds?
Bonds can be purchased through online platforms in individual bonds and debt mutual funds that invest in a variety of bonds.

May 27, 2025

What is Cut-off Price in IPO – Meaning and Example

IPO provides you with an opportunity to invest in companies which are going public for the first time. Nowadays, IPO applications can be made online using UPI. But while applying for an IPO, you need to enter a bid price within the price range offered by the company. Now the question arises: at which price one should place their bid?

In this blog post, we will explain to you what a cut-off price is and how selecting the correct cut-off price can increase your chances of getting an IPO allotment.

What is the Cut-Off Price in an IPO?

A cut-off price is the final price at which the shares are allotted to the investor during the IPO. During the subscription period of the IPO, the company announces a price band at which investors can place bids. The lead managers play an important role in deciding the cut-off price of an IPO, which is determined based on the weighted average figure of all the bids received during the IPO subscription and it is the final issue price for the IPO.

Investors who bid at or above the cut-off price are considered eligible for allotment of shares. Whereas investors who bid below the cut-off price are deemed ineligible for IPO shares, i.e. their IPO applications are rejected and their money is refunded.

Example of Cut-off Price

Let’s understand the cut-off price with a real-time example of the LIC (Life Insurance Corporation of India) IPO, which was one of the largest IPO in India.

IPO Subscription date was from 4th May 2022 to 9th May 2022.
Price Band: ₹902 – ₹949 per share
Total Issue Size: 21,008.48 crores.

The cut-off price is the final issue price of the IPO at which the shares are allotted to the investors. Remember, those who are applying below the cut-off price will not be allotted any shares.

On the Listing Date, the shares of LIC were listed at ₹872 on NSE, which was a discount to the price band’s lower price, which means investors made a loss on the listing date.

How to Apply at the Cut-off Price?

You can easily apply for an IPO at the cut-off price be following the steps below:

Log in to your trading account and find the IPO section.
Select the IPO you want and choose the cut-off price option when entering your bid price.
Enter the number of lots you wish to apply for (each lot has a fixed number of shares).
Funds equal to the maximum price in the price band multiplied with the number of shares applied for will be blocked in your bank account via ASBA.
After the IPO closes, you pay the final cut-off price per share if the shares get allotted to you. However, if the shares are not allotted then the blocked amount will be refunded automatically.

Applying at the cut-off price simplifies the process and improves your chances of allotment.

Factors Impacting Cut-off Price

The factors which affect the cut-off price are as follows:

Demand: IPO demand plays an important role in determining the cut-off price. If the demand is on the higher side, the cut-off price will be at the upper price band.
Market Sentiments: If the market sentiments are negative, the investors are more likely to place a bid below the upper price band, which can reduce the cut-off price.
Comparison: To evaluate the IPO valuation, investors compare the company’s valuation with its listed peers and decide the bidding price accordingly.

Benefits of Bidding at the Cut-off Price

The significant benefits of investing at the cut-off price are as follows:

Higher Chances of Allotment: Bidding at the cut-off price increases your chances of allotment, as you are agreeing to purchase the shares at the final price decided after considering all the bids received for the IPO.
Simplicity: The investors who want to give themselves the best chance to receive an allotment can opt to apply at the cut-off price.
Fair Pricing: The investors who bid at a cut-off price or above it ensure the fairness and transparency in the bidding and allotment process.
Reflects Market Demand: The cut-off price calculated considering all the received IPO bids is based on market demand-driven approach. Hence, it provides a balance between company valuation and the interest of investors.

Limitations of Bidding at Cut-off Price

There are a few limitations which investors should be aware of:

1. High Price: If you have applied at the cut-off price, then you will be agreeing to pay whatever the final issue price is within the price band. In that case, you might have to pay more than what you have intended.

2. Does not Guarantee Allotment: Bidding at the cut-off price increases your chance of allotment; however, it does not provide any guarantee for the same. If the IPO is oversubscribed, the allotment will be done through a lottery system.

3. Loss on Listing: If the shares are listed below cut-off price, it can cause immediate loss to the investor.

Should I select the cut-off price for the IPO?

As a retail investor, you must apply at the cut-off price to increase your chances of allotment, as applying at a cut-off price, you are agreeing to pay the final allotment price within the price band determined considering all the bids.

If in case you applied at a price below the cut-off price then your IPO application will be rejected and you will not get any allotment.

However, if you are an experienced investor and are able to evaluate the financial performance of a company and determine the actual price at which the shares can be allotted, then you can place your bid accordingly.

Conclusion

On a concluding note, the cut-off price plays an important role in IPO applications. Cut-off price helps an investor maximize his or her chances of getting an allotment. Cut-off price is important for retail applicants, who may not be able to accurately determine a company’s valuation. However, it is advisable to consult your financial advisor before bidding for any IPO.

To bid for an IPO, you need to open a Demat and trading account, which can be opened online free of cost through the Pocketful website. Pocketful also provides an advanced trading platform equipped with advanced trading tools.

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4	What is Face Value in an IPO?
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Frequently Asked Questions (FAQS)

What is the meaning of price band in an IPO?
A price band is a price range within which an investor can bid for an IPO.
Does bidding at the cut-off price guarantee to get an allotment?
No, bidding at a cut-off price only increases your chance of getting an allotment. However, if the IPO is oversubscribed, the allotment will be based on a lottery basis.
How is the cut-off price decided?
The cut-off price is determined by the lead managers and is based on the weighted average of all the bids received during the IPO subscription period.
Is it mandatory to bid at a cut-off price?
No, it is not mandatory to bid at a cut-off price, as you can place your bid at any price between the price band.
What is the maximum amount for which an investor can apply for an IPO under the retail category?
As per SEBI, an investor can apply for IPO under the retail investor category for a maximum of ₹2,00,000 worth of shares.

May 27, 2025

What is IPO Listing Time?

IPO is one of the most important events for a company as it marks the first time the company’s shares are offered to the general public. The company is said to have gone public after the IPO as retail investors also get a chance to own shares in the company and become a part of its future growth story. There are certain timelines defined by the SEBI regarding the listing of IPO.

In this blog, we will explain the IPO listing timeline and its process to you.

What is an IPO?

An IPO, or Initial Public Offering, is a process through which a company raises money from the public by offering them shares. After the IPO, the company becomes a publicly listed company, and its shares are traded on the stock exchange. The company can raise money from the public to pay off its debt, for expansion, etc.

But what happens on the first day the company’s shares are about to get traded on the stock exchange? Let’s look at the whole process that takes place on the listing day in detail.

IPO Listing Timeline on the Listing Day

The time of the IPO listing is as follows:

Phase of Trading	Particulars	Timing
Pre-Market	During the pre-market session, the limit orders are placed by the investor. During pre-market order timing, the Indicative Equilibrium Price (IEP) changes based on the orders placed by the investors.	9:00 AM to 9:45 AM
Order Matching and Execution	Based on the final Indicative Equilibrium Price, the exchange will calculate the opening price of the Stock.	9:45 AM to 9:55 AM
Buffer Session	During the buffer session,the exchange ensures that the market can smoothly transit from order matching and execution session to regular trading session.	9:55 AM to 10:00 AM
Normal Trading	This is also known as the “Bell Ringing” session, after which the regular trading session begins, and investors can now start trading.	At 10 AM

Read Also: What is the IPO Allotment Process?

IPO Listing Process in India

The listing of an IPO in India involves various steps, details of which are as follows:

Appointment of Merchant Banker: Once the company decides that it wants to list itself on the stock exchange, it appoints an investment banker, who completes all the regulatory formalities related to listing, ranging from compliance to preparing the DRHP.
Filing of DRHP: During this step, the company files a DRHP or Draft Red Herring Prospectus with the Securities and Exchange Board of India (SEBI) and waits for its approval.
Selection of Stock Exchange: In this step, the company decides the exchange on which it wants to get its shares listed.
Pricing: In this, the lead managers determine the offer price based on the market demand.
Marketing: Once the price is decided, a marketing campaign is launched to promote the IPO.
Issuing the Prospectus: The final prospectus, known as the Red Herring Prospectus or RHP is issued, which includes the offer price range.
Opening for Subscription: The IPO opens for different categories of investors for a defined period of three days.
Allotment: Once the IPO subscription period is closed, the shares are allotted to the successful bidders based on a lottery system.
Refund: Those who do not get any shares during the IPO allotment, the amount refunded to them within 7-10 working days.
Listing: After the completion of the allotment process, the company’s shares are listed on the respective stock exchanges. Once listed, they are available for trading.

How is the IPO Listing Price Determined?

There are several factors based on which the pricing of an IPO is determined; a few of such key factors are mentioned below:

Demand: If an IPO has high demand during the subscription phase, it might lead to a high premium on listing.
Market Sentiments: Current market trends play an important role in determining the listing price of an IPO. If the market is in a bullish trend, it can lead to high listing prices due to bullish investor sentiment.
Subscription Level: During the IPO subscription process, if the subscription figures are on the lower side, it might lead to lower listing premiums or even list at a discount. On the other hand if the IPO is oversubscribed, then it indicates positive investor sentiment towards the IPO and the shares may list at a premium.
Grey Market Premium (GMP): The GMP in the unofficial metric that tells us about the expected premium at which the share may list. Grey market gives us a good idea about the listing price of the IPO shares. If GMP is higher, the IPO is expected to list at a premium and vice-versa.

IPO Issue Price vs IPO Listing Price

The definitions of IPO issue price and IPO listing price is listed below:

IPO Issue Price: It is a price at which the company offers shares to the general public. This price can be determined through fixed-price or book-building methods.

IPO Listing Price: It is the price at which the company’s shares get listed on a stock exchange. In simple terms, we can say that at this price, the shares started trading for the first time on the exchange.

Conclusion

On a concluding note, an IPO priced fairly offers an investor a great opportunity to earn listing gains, but one should have information about the IPO process. Generally, traders invest in IPO only to get the listing gains. However, if you are a seasoned investor or trader, you must stay updated on the IPO schedule as investing in an IPO carries certain risks, Therefore, it is advised to consult your investment advisor before making any investment decision.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	Anchor Investors in IPOs – Meaning, Role & Benefits
2	Apply in IPO Through ASBA- IPO Application Method
3	Why Invest in an IPO and its Benefits?
4	IPO Application Eligibility Criteria:
5	What is the IPO Cycle – Meaning, Processes and Different Stages

Frequently Asked Questions (FAQs)

At what time does trading in an IPO start?
The trading in the IPO begins at 10:00 AM on the scheduled listing date after all the regulatory formalities are completed.
Can I sell my stock on the listing day?
Yes, you can easily sell stocks allotted to you on the scheduled listing day like any other ordinary stock.
What is the impact of pre-open sessions on IPO listings?
The pre-open session starts from 9:00 AM, and the trading starts in the IPO from 10 AM. During this period, the demand and supply might influence the listing price of the IPO.
What is the duration of an IPO’s subscription period?
Generally, IPOs are open for subscription for 3 working days.
Can an IPO list below the issue price?
Yes, an IPO can list the issue price below, as the listing price depends on various parameters such as market sentiments, demand for the IPO, etc.

May 27, 2025

ETF vs Index Fund: Key Differences You Must Know

The trend of passive investing is growing rapidly in India, where people are investing in funds that follow indexes like Nifty 50 or Sensex. The AUM of passive funds in India is expected to reach ₹11.13 lakh crore in 2025, which includes both ETFs and index funds.

Both these options provide low-cost investment, but there are some important differences between them. In this blog, we will understand the difference between Index Funds and ETFs in simple language and know which one is better for you.

What is an Index Fund?

An index fund is a type of mutual fund that tracks a certain market index (such as Nifty 50 or Sensex). Its objective is to replicate the performance of that index. This fund invests in shares of only those companies that are part of that index, and investment is made in the same proportion as that of index.

Passive Investment Strategy : In an index fund, stocks are not selected by an active fund manager. Instead, investment is only made in shares that are index constituents. This is why it is called a passive investment strategy. Its expense ratio is also low due to less analysis required.
Transaction Process : Index funds are bought and sold at the NAV (Net Asset Value) declared at the end of the day. That is, there is no continuous buying and selling during the day, as is the case with ETFs.
Not Expensive : It is possible to invest small amounts at regular intervals in this fund through SIP (Systematic Investment Plan) and build your investment portfolio over time.

Key features in brief:

Invests in index-based stocks
Not actively managed
Low cost and low risk
SIP facility available

What is an Exchange-traded fund?

An ETF, i.e., an exchange-traded fund, is a fund that tracks a particular stock market index, such as the Nifty 50 or Sensex, gold, silver, etc. The main difference between an index fund and an ETF is that it can be bought and sold in real time in the stock market, like shares of a company.

Intraday trading facility : ETF is traded on the stock exchange, so its price keeps changing throughout the day depending on demand and supply. Investors can do intraday trading in it; that is, buying and selling is possible on the same day.
Investment process and requirements: Demat and trading accounts are mandatory for investing in an ETF because its units trade like stocks. This fund is suitable for those who want to manage their investments a little more actively.
Low cost and transparency : The expense ratio of ETFs is very low, and they follow the index in a transparent manner due to low tracking error. Apart from this, ETFs also have high liquidity, as they can be sold anytime during market hours.

Key features in brief:

Can be bought and sold in real-time in the stock market
Tracks a specific index, gold, silver, etc.
Demat and trading account mandatory
Low expense ratio
Facility for intraday trading

Difference Between ETF and Index Fund

The table below presents the key differences between ETFs and index funds. The comparison is based on important aspects such as investing method, cost, tax, investment process, and liquidity. This table is useful for both professional investors and beginners to make the right decision.

Parameter	ETF (Exchange Traded Fund)	Index Fund
Investment Process	Trades on stock exchanges like individual stocks.	Bought or sold only at the end-of-day NAV.
Liquidity	High liquidity – can be bought/sold any time during market hours.	Relatively Lower liquidity – transactions occur only once a day based on NAV.
Expense Ratio	Exchange-traded funds have a lower expense ratio than index funds.	Index Funds have a higher expense ratio than exchange-traded funds.
SIP Availability	SIP cannot be done.	SIP can be done.
Demat Account Requirement	Mandatory requirement of both demat and trading accounts for investing.	Not required, if you prefer to hold the mutual fund units in physical form.
Minimum Investment	Can start with the price of one unit	Minimum SIP amount usually starts at ₹500 or ₹1000.
Pricing Mechanism	Real-time market price fluctuates based on demand and supply throughout the day.	NAV-based pricing calculated and declared once daily.
Investment Experience	Requires technical understanding of trading, pricing, and brokerage.	Simple and user-friendly; ideal for beginners.

Both ETFs and index funds are great options for passive investment. ETFs offer more flexibility, liquidity and trading experience but require a Demat account. On the other hand, index funds are simple, safe, and ideal for long-term investing with features like SIP.

Pros and Cons of Index Funds and ETFs

Pros and Cons of Index Funds

Pros :

It is easy to start investing as a Demat account is not required for investing in Index funds mutual funds.
It is possible to make regular and systematic investments through SIP.
The most suitable and simple option for new investors.

Cons :

There is no real-time trading; transactions are done only at the end of the day on NAV.
Tax efficiency is less than ETFs.
There is not much flexibility in trading.

Pros and Cons of ETFs

Pros :

Can be traded on the stock exchange during market hours.
The expense ratio is low, which reduces the cost.
Transparency and liquidity are high.

Cons :

Demat and trading accounts are required for investing in ETFs.
SIP facility is not generally available, so regular investment can be a bit difficult as investors have to invest manually.
There may be additional expenses incurred during trading, such as brokerage and bid-ask spread.

Both options have their own advantages and disadvantages, so the choice of investment depends on the individual’s needs and investment style.

Which Should You Choose?

Deciding between index funds and ETFs can be tough. You can refer to the points mentioned below to make a smart investment decision:

Investment goals and period : If you want to make stable and regular investments for a long period, then an index fund is better. It has the facility of SIP, through which small investments can be made at regular intervals without much effort. It is also an easy and suitable option for new investors.
Active vs Passive Investment : If the risk-taking capacity is high and you want to take advantage of the ups and downs of the market, then an ETF is a better option as the investor can actively trade it on the stock market. On the other hand, if the investor prefers a passive investment, then an index fund should be the priority.
Investment platform and requirements: Demat and trading accounts are mandatory for investing in an ETF, along with market understanding. In contrast, an index fund can be purchased directly from the fund house, in which a Demat account is not required.

One should choose between an ETF or index fund keeping in mind the investment goal, risk capacity, and available resources. The right choice ensures maximum profit and security of investment.

Know More: Calculate returns on ETF investments.

Conclusion

Both ETFs and index funds are great and low-cost options for passive investing. The main difference between the two is in the trading process, liquidity, tax efficiency, and investment method. ETFs can be traded on stock exchange and are more transparent, while index funds are simpler to invest in and suitable for SIPs. To make the right choice, it is important to evaluate your investment goals, risk tolerance, and available resources. It may also be wise to consult a financial advisor before starting to invest.

Frequently Asked Questions (FAQs)

What is the main difference between an ETF and an Index Fund?
ETFs can be traded on the stock exchange, while Index Funds are bought or sold at the end of the day NAV.
Can I start SIP in ETFs?
Direct SIP is not possible and the investor must manually buy ETF units at regular intervals.
Is Demat account necessary for Index Funds?
No, a Demat account is not required to invest in an Index Fund.
Which is better for beginners: ETF or Index Fund?
Index Fund is easier and more convenient for beginners.
Are ETFs more tax-efficient than Index Funds?
Yes, ETFs are slightly more tax efficient, especially in the long term.

May 26, 2025

What is Gold ETF? Meaning & How to Invest Guide

Gold has been important in India for centuries from an investment and cultural point of view. Traditionally, people used to buy gold in the form of jewellery, coins or biscuits. However, buying physical gold comes with challenges such as storage, insurance, and making charges.

Currently, investors are turning to digital options, among which Gold Exchange Traded Funds (Gold ETFs) are prominent. These funds trade on the stock exchange and track gold prices, allowing investors to invest in it without buying physical gold.

What is a Gold ETF?

Gold ETF or Gold Exchange Traded Fund can be considered as a type of mutual fund that tracks the prices of gold and can be bought and sold in the stock market. It is a digital medium of investment, which is free from the problems of storing physical gold.

It eliminates hassles of owning physical gold such as storage, insurance or making charges. It is a safe, transparent and convenient way to invest in gold. The purpose of investing in Gold ETF is to diversify the investment portfolio, protect against inflation and market decline.

This investment instrument has the potential to give stable and reliable returns over the long term. For this reason, Gold ETF can be considered a smart investment option in today’s time.

Key features of Gold ETF

Gold ETFs are traded in the stock market, just like stocks of a company are bought or sold. Its key features are:

Linked to the price of gold: The mechanism of a gold ETF fund is very simple. The ETF tracks the price of gold and its price fluctuations, which are closely linked with the price changes of physical gold.
Backed by real gold: Gold ETFs are backed by real (physical) gold. This means that every unit has some quantity of actual gold behind it either in the form of physical gold or in the form of ETCDs (Exchange Traded commodity Derivatives) that have physical gold as underlying asset.
Traded on stock exchanges: The biggest feature of these ETFs is that they can be bought or sold anytime during market hours. This makes them a liquid and flexible investment option.
Low cost and hassle-free investment: Investing in gold ETFs involves neither making charges nor storage fees. It is a less expensive and easier investment option than physical gold.

How to Invest in Gold ETFs in India?

Investing in Gold ETFs is an easy process. It is similar to buying stocks in the stock market.

Step-by-step process:

1. Open Demat and Trading Account: To buy Gold ETF, first of all you need a Demat and trading account. Pocketful is a SEBI-registered brokerage platform with an easy to use mobile application and web platform, offering advanced technical tools and market insights.

2. Choose the appropriate Gold ETF Fund: Compare Gold ETF Funds offered by different issuers, such as GOLDBEES, SETFGOLD, etc. Make sure to check the following:

AUM (Assets Under Management) of the fund
Expense Ratio
Tracking Error

3. Buy from Trading app: One can also invest directly in Gold ETF from Pocketful’s mobile application.

Note: For a profitable investment journey, remember the following points:

Decide your financial goals
Start with small investments
Keep an eye on tracking error and trends in gold prices
Invest with a long-term view

Taxation on Gold ETF Investment

Gold ETFs have now been placed in a separate category and are taxed based on the information in the table below:

Holding Period	Type of Capital Gains	Tax Rate
12 months or less	Short-Term Capital Gains (STCG)	As per individual income tax slab
More than 12 months	Long-Term Capital Gains (LTCG)	12.5% flat rate

Tips for Investors

Tax Planning: It is important to plan before investing keeping in mind the tax implications.
Professional Advice: It may be beneficial to consult a tax advisor to understand tax-related complexities.

Advantages of Gold ETFs

Various advantages of Gold ETFs are:

No storage concerns: Unlike investing in physical gold, gold ETFs investors do not have to worry about safe storage or theft.
High liquidity: Gold ETFs are traded on the stock market, so they can be easily bought or sold anytime during market hours.
Transparent pricing: Gold ETF prices are directly linked to gold prices, which keeps ETF pricing transparent and unbiased.
Low expenses: Compared to gold mutual funds, gold ETFs have lower management expenses (Expense Ratio), which reduces the overall cost of investment.
Portfolio diversification and inflation protection: Gold ETFs help you diversify investments and also provide protection against inflation.

Overall, gold ETFs combine the benefits of investing in gold with the ease of equity investing, making it a simple, affordable and effective investment option.

Disadvantages of Gold ETFs

Disadvantages or risks associated with investing in Gold ETFs are listed below:

No physical delivery: Gold ETFs cannot be redeemed for actual gold due to which some investors may prefer owning physical gold relative to investing in gold ETF.
Possibility of tracking error: Sometimes the price of gold ETFs may differ slightly from the price of physical gold.
Market volatility: The price of gold ETFs may fluctuate due to trading in the stock market.
Demat account required: A Demat and trading account is required for investment, which some investors may not have.
No additional interest: Unlike sovereign gold bonds, gold ETFs do not offer any additional interest or dividend.

For these reasons, it is important to understand all the risks and limitations before investing.

Should You Invest in Gold ETFs?

Below are the reasons behind why you should invest in Gold ETFs:

Risk control: Gold ETFs are a good choice for investors who want to minimise risk and diversify their portfolio.
Convenient digital exposure: Gold ETFs offer a seamless and transparent way to invest in gold through digital medium as compared to physical gold.
Suitable for medium to long term investments: Gold ETFs are effective instruments for inflation protection and capital preservation during economic volatility.
Begin Small: Some of the Gold ETFs trade below ₹100, making them accessible to small investors. Whereas, investing in physical gold requires substantial amounts of capital.

However, it is important to take expert advice regarding individual financial situations and investment goals before investing to make the right decision.

Read Also: How to Invest in Silver in India?

Conclusion

Gold ETFs are a smart, convenient and modern way to invest in gold. It is not only tax efficient but also safe and ideal for diversifying your investment portfolio. While avoiding the hassles of physical gold, Gold ETFs offer the simplicity of digital investing. To balance your portfolio, consider investing in Gold ETFs today with Pocketful.

Frequently Asked Questions (FAQs)

How to invest in Gold ETF?
To invest in Gold ETF, it is necessary to have a Demat and trading account. You can easily open an account with Pocketful, transfer funds, search for Gold ETFs and begin investing.
What are the tax implications of Gold ETF?
Holding for less than 12 months is taxed as per the income tax slab, and holding for more than 12 months is taxed at 12.5% LTCG.
Can Gold ETF be exchanged for physical gold?
No, Gold ETFs do not provide delivery of physical gold as they are only digital units.
Is Gold ETF better than physical gold?
Gold ETFs have several benefits over physical gold, such as no storage fees, more secure and highly liquid, making them a better option for many investors.

Gold Rate in Top Cities of India	Silver Rate in Top Cities of India
Gold rate in Ahmedabad	Silver rate in Ahmedabad
Gold rate in Ayodhya	Silver rate in Ayodhya
Gold rate in Bangalore	Silver rate in Bangalore
Gold rate in Bhubaneswar	Silver rate in Bhubaneswar
Gold rate in Chandigarh	Silver rate in Chandigarh
Gold rate in Chennai	Silver rate in Chennai
Gold rate in Coimbatore	Silver rate in Coimbatore
Gold rate in Delhi	Silver rate in Delhi
Gold rate in Hyderabad	Silver rate in Hyderabad
Gold rate in Jaipur	Silver rate in Jaipur

May 26, 2025

Commodity vs Forex Trading: Key Differences, Pros & Cons

Trading has become increasingly popular in recent times, with commodity and forex trading emerging as prominent options. The major difference between the two is the assets being traded. However, apart from underlying assets, many people do not fully understand the technical details of both.

In this blog, we will explain the differences, advantages and disadvantages of these two types of trading in simple language so that you can decide which option is better for you.

Understanding Commodity Trading

Commodity trading is a process that involves buying and selling commodities in either physical form or through complex financial instruments with underlying assets as commodities.

These commodities are usually divided into two categories:

Hard commodities: such as gold, silver, crude oil, and metals
Soft commodities: such as wheat, cotton, coffee,e and other agricultural products

The main objective of commodity trading is to make a profit by predicting future price changes. Commodity trading is usually done through futures and options contracts on regulated commodity exchanges. Futures contracts can be used to fix a price at which the commodity will be bought or sold at a certain date.

Futures contracts of commodities are standardized and are traded on regulated exchanges such as MCX (Multi Commodity Exchange) or NCDEX (National Commodity & Derivatives Exchange). This ensures transparency and security in transactions. Commodity trading gives traders a good option to diversify their portfolios and hedge against inflation.

Read Also: Types of Commodity Market in India

Understanding Forex Trading

Forex trading means buying and selling of currency pairs, which means buying one currency and selling another currency. In India, you can trade in USD/INR, EUR/INR, GBP/INR and JPY/INR pairs. It is the largest and most liquid market in the world, where transactions worth more than $7.51 trillion take place daily.

The forex market is completely decentralized and trading takes place around the clock, which gives traders opportunities at any time. However, in India forex trading is regulated by SEBI and can be done between 9 am and 5 pm from Monday to Friday.

Commodity vs Forex Trading – Key Differences

Commodity trading and forex trading are both popular among new market participants. In terms of market size, forex is the world’s largest and highly liquid market, with transactions worth over $7.5 trillion daily. In contrast, the commodity market is smaller in size and mostly exchange-based. A detailed comparison is shown below:

Factor	Commodity Trading	Forex Trading
Market Size	Significantly large but smaller than Forex. Traded on commodity exchanges like MCX, NCDEX.	Largest financial market in the world. As per BIS data (2025), the daily volume exceeds $7.5 trillion. Traded under the Currency Derivatives Segment (CDS) at NSE.
Underlying Assets	Futures and Options contracts have underlying assets such as gold, silver, crude oil, wheat, coffee, etc.	Currency pairs such as EUR/INR, USD/INR, etc.
Leverage	Generally moderate and defined by the exchange.	Offers very high leverage. In India, major currency pairs allow up to 50x.
Volatility	Influenced by geopolitical events, weather, supply-demand dynamics due to which sudden price movements are common.	Driven by central bank policies, interest rate decisions, economic indicators, and global news. Can be highly volatile.
Liquidity	High liquidity for major commodities like gold and crude oil. Some agricultural commodities may have low liquidity.	Extremely liquid. High trading volumes in popular currency pairs ensure easy entry and exit at almost any time.
Trading Hours	Limited trading hours based on exchange rules. For instance, MCX in India operates from 9:00 AM to 11:30 PM.	Opens 9 am to 5 pm, 5 days a week (Monday to Friday).
Regulation	Heavily regulated by governing bodies. In India, it’s overseen by SEBI. Trades are transparent and exchange-based.	Comparatively less regulated. Being primarily an OTC (Over-the-Counter) market, the volumes on futures contracts on currency pairs have low trading volume on NSE.
Instruments	Futures and Options contracts traded on MCX and NCDEX.	Multiple financial instruments available: Forwards, Futures, Options. Flexible instruments tailored for traders and institutions.
Suitability	Suitable for hedgers looking to protect against price fluctuations in physical commodities.	Best for day traders, scalpers, and those seeking short-term profit opportunities in a fast-paced market.

Based on these key differences, you can decide which option is better as per your investment strategy and risk tolerance.

Pros and Cons of Commodity Trading

The pros and cons of commodity trading are explained below so that you can begin your trading journey with all the required information.

Pros

Diversification: Trading in commodities in addition to stocks helps reduce overall portfolio risk.
Hedge against Inflation: Commodity prices usually rise when inflation rises, making it a good hedge against inflation.
Leverage: Commodity trading requires a small margin to begin and thus allows speculators to take advantage of the price fluctuations.

Cons

High Volatility: International events, natural disasters, and changes in supply-demand can cause commodity prices to change rapidly.
Complex Process: Financial instruments such as futures and options and knowledge about settlement processes are not easy to understand; so experience is a must.
Storage and Transportation Costs: Storage and transportation costs for physical commodities (such as oil, grains) add to transaction costs.

Read Also: Tax on Commodity Trading in India

Pros and Cons of Forex Trading

Forex trading, i.e. currency trading, is one of the most liquid and accessible financial markets in today’s time. But it has as many risks as opportunities.

Pros

High liquidity: The forex market is one of the most liquid markets in the world, making it easy to enter and exit at any time.
Low transaction costs: Spreads (difference between buy-sell prices) are very low, making trading cheaper.
Advantage of leverage: It allows you to take a much larger position with less capital. Leverage up to 1:50 is available on major currency pairs in India.

Cons

High risk: While profits can be higher due to leverage, losses can also be as big.
Constant monitoring required: The prices of currency pairs can be impacted by major global events, interest rate changes, etc. This can cause volatility due to which forex trading requires constant attention.
Risk management is important: Heavy losses are possible if you trade without a strategy and stop-loss.

Which Market is Better for Traders?

Both commodities and forex are attractive options for trading, but your choice should be based on the following points:

Risk tolerance: If you can handle higher volatility, commodity trading is better. Forex trading is more suitable for those seeking lower risk.
Margin Required: Forex offers high leverage and thus a lower margin, while commodities require a relatively higher margin.
Experience and knowledge: Those with a good understanding of central bank decisions, interest rate changes, and other economic factors can trade in forex. Whereas, trading in commodities requires in-depth knowledge about the demand and supply factors affecting a particular commodity.
Trading Objective: Manufacturers typically hedge the price of their raw material using the futures contract of a specific commodity. On the other hand, companies with foreign currency exposure might want to protect themselves from adverse price fluctuations using forward contracts.

How to Start Trading in Forex and Commodity Markets?

You can start trading in Forex and Commodity markets by following the steps below:

Choose a broker or platform: First of all, choose a platform that is reliable and follows all the necessary regulations.

Create a trading account: Go to their website or mobile app and fulfill KYC requirements and provide all the required documents.
Understand the market: Do some research before trading, such as learning about the derivative instruments and strategies, paper trading, etc.
Start with a small investment: Avoid using large amounts at the beginning and try to learn the practical side of trading by practising with a small capital.
Continuous Learning: Track market news, try out new strategies and keep improving your trading skills.

Conclusion

Commodity and forex trading both offer good earning potential, but they operate quite differently. Forex markets are highly liquid and majorly impacted by central bank’s interest rate decisions, whereas commodity trading tends to be more volatile and can be used as a hedge against inflation. If you’re unsure which market to pick, take time to consider how much risk you’re comfortable with, what your goals are, etc. Gaining a deeper understanding of the market, learning from experience, and managing risk carefully at every step can make a big difference. With the right mindset and discipline, both markets can offer solid trading opportunities.

Frequently Asked Questions (FAQs)

What is the difference between commodity and forex trading?
Commodity trading involves trading of commodities such as gold, silver, oil, etc., primarily through futures and options contracts whereas forex trading involves trading of currency pairs such as USD/INR, EUR/INR, etc.
How can I start trading in forex and commodity markets?
You need to open a trading account with a SEBI-registered broker by completing the KYC process.
Which is more volatile: forex or commodity trading?
Commodity trading is typically more volatile as it is influenced by global economic events.
Can I make money from commodity or forex trading?
Yes, but it requires the right strategy, risk management and experience.
Is forex trading safe?
Forex trading involves risk and you must have the right strategy and risk management to trade currencies successfully.

May 24, 2025

Blog

Gold ETFs and Gold BeES: A Quick Comparison

Understanding Gold BeES

How Gold BeES Works?

Risks Associated with Gold BeES

Understanding Gold ETFs

How Gold ETFs Work?

Taxation of Gold ETFs and Gold BeES in India (2025)

Risks Associated with Gold ETFs

Who Should Invest in Gold BeES or Gold ETFs?

How to Invest in Gold BeES or Gold ETF Using Pocketful?

Conclusion

Frequently Asked Questions (FAQs)

Is Gold BeES the same as Gold ETF?

Can I invest in Gold BeES without a demat account?

Which is better for beginners – Gold BeES or Gold ETFs?

Are Gold ETFs and Gold BeES backed by physical gold?

How is tax calculated on Gold BeES and Gold ETFs?

What is an ETF?

What is Stock?

ETF vs Stock: Key Differences

Pros and Cons of Investing in ETFs

Pros and Cons of Investing in Stocks

Stocks or ETFs: Which is Better?

Common Mistakes to Avoid While Choosing Between Stock and ETF

Conclusion

Frequently Asked Questions (FAQs)

Which is safer: an ETF or Stock?

Can beginners start with ETFs?

Is it possible to have both an ETF and stocks in a portfolio?

Are ETFs suitable for long-term investment?

Can I trade ETFs like regular stocks?

इंट्राडे ट्रेडिंग क्या होती है? – Intraday Trading Kya Hoti Hai?

इंट्राडे ट्रेडिंग का एक आसान उदाहरण

इंट्राडे ट्रेडिंग शुरू करने के आसान कदम

इंट्राडे ट्रेडिंग के लिए सही समय का चयन

इंट्राडे ट्रेडिंग में लगने वाले शुल्क और खर्चे

इंट्राडे ट्रेडिंग बनाम डिलीवरी ट्रेडिंग: क्या है बेहतर?

इंट्राडे ट्रेडिंग के लिए उपयोगी संकेतक

इंट्राडे ट्रेडिंग के मुख्य फायदे

इंट्राडे ट्रेडिंग में शामिल जोखिम

इंट्राडे ट्रेडिंग के लिए असरदार रणनीतियाँ

इंट्राडे ट्रेडिंग और कर का गणित

इंट्राडे ट्रेडिंग का सारांश

इंट्राडे ट्रेडिंग से जुड़े सवाल और उनके जवाब (FAQs)

इंट्राडे ट्रेडिंग में ट्रेड कितने बजे तक बंद करना होता है?

क्या इंट्राडे ट्रेडिंग से रोज़ाना कमाई की जा सकती है?

इंट्राडे और डिलीवरी ट्रेडिंग में क्या अंतर है?

क्या इंट्राडे ट्रेडिंग टैक्सेबल होती है?

नए ट्रेडर्स के लिए कौन-सी रणनीति बेहतर है?

क्या स्टॉप लॉस ज़रूरी है?

What is a Corporate Bond?

Features of Corporate Bonds

Types of Corporate Bonds

1. Secured Bonds

2. Unsecured Bonds

3. Fixed Interest Rate

4. Floating Interest Rate Bonds

5. Convertible Bonds

6. Non-Convertible Bonds

7. Callable Bonds

9. Putable Bonds

10. Zero Coupon Bond

Benefits of Investing in Corporate Bonds

Risk of Investing in Corporate Bonds

Factors Influencing the Price of Corporate Bonds

How to Invest in Corporate Bonds?

Conclusion

Frequently Asked Questions (FAQS)

Who is allowed to invest in corporate bonds?

What risks are involved with corporate bond investment?

How can I sell a corporate bond before maturity?

Which is the safest corporate bond based on credit ratings?

Reasons to Invest in Bonds

Top Benefits of Investing in Bonds

1. Stable and Predictable Income

2. Capital Preservation

3. Portfolio Diversification

4.Tax Benefits

5. Aids in Nation-Building and Development of Businesses