Skip to main content

Gold Feeder funds are the best option for SIP investors, ETFs for lump sum

 There are four avenues to invest in gold. You can do so through

Ø       physical gold (coins and bars),

Ø       gold exchange-traded funds (ETFs),

Ø       feeder funds and

Ø       the e-series (popularly called, e-gold) launched by the National Spot Exchange.

Of these, paper gold is favoured unanimously as an investment avenue. Buying physical gold is not attractive because of the higher purchase price and lower selling price. Storage and safety are the other issues.

Gold ETFs, the oldest form of paper gold, are not favoured by many, as these require a demat account to invest. Fund houses levy an expense ratio of only one per cent. But the extra charges come by way of the brokers' fee of up to 0.5 per cent. The annual maintenance cost of a demat account is `400-500.

Next is the e-gold option. The costs here are similar, but only in the first month. Since e-gold allows Das to invest through systematic investment plans (SIPs), her first month's cost (`400-500) would reduce from the second month, as she will be only incurring brokerage costs. One can accumulate the units over time. And, use these for child's marriage or making jewellery in the future.

However, if you opt for physical delivery, costs will increase further. The delivery option should be the last resort, because of the delivery fee of `200, irrespective of the quantity, and `50 for every such request charged by the depository.

At present, the National Spot Exchange allows exchanging e-gold units into coins or bars of 8, 10, 100 gm and one kg. It charges `200 each for conversion of 8 and 10 gm coins, 100 for 100 gm and no charge for one-kg bar. You will also have to pay a value-added tax at one per cent and Octroi for conversion of electronic units into physical coins (for Mumbai = 0.1 per cent).

You can buy gold in its physical form, such as coins and bars, only from banks and jewellers. Typically, banks will charge you between 1015 per cent higher than the market price. Jewellers will sell it for 5-10 per cent higher. The option is the post office. They charge a premium of 15-20 per cent on gold coins. If Das were to purchase gold from banks, jewellers or post office, she will lose anywhere between five and 20 per cent ( `250-1,000) Finally, there are gold feeder funds. If you do not have a demat account, gold feeder funds are a good option, as it does not make sense to open a demat account only for buying gold via ETFs. In addition, there is an option to do SIPs as well. The only expense here is the expense ratio of 1.5 per cent. This implies that Das will be able to save 4,925 (expense ratio `75) the highest among the four options.

PHYSICAL GOLD

Sold at: 5-10 per cent higher price

Banks don't buy back, jewellers buy back at 10 per cent lower price

GOLD ETFs

Brokerage: up to 0.5 per cent

Expense ratio: 1 per cent

Demat maintenance cost `400-500

Can be redeemed on the exchanges; SIP not offered

GOLD FEEDER FUNDS

Expense ratio: 1.50 per cent

Can be redeemed; SIP allowed starting `100

E-GOLD

Brokerage: 0.25-0.5 per cent

Transaction fee: `20 per transaction

Demat maintenance cost: `400-500

Can be sold at National Spot Exchange; minimum 1 gm gold can be bought via SIP

 

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now