Skip to main content

Feeder funds are the cheapest way to invest in gold

Buy Gold Mutual Funds

Invest Mutual Funds Online

Download Tax Saving Mutual Fund Application Forms

Call 0 94 8300 8300 (India)

 

There are four ways to put your money in gold — buying physical gold/jewellery, putting money in gold exchange-traded funds (ETFs), investing in a gold savings fund and going for the National Spot Exchange's e-gold. Now, some gold ETFs and e-gold even allow taking physical delivery of gold at the end of investment tenure. That might sound good if you wish to possess physical gold.

But, given the firm price of gold today (almost ~31,000 per 10g), it is important that gold is bought through acost-effective avenue. Reason: Investing comes at a price.

Add to that, India's gold buying is expected to decline in 2012 and 2013, according to the latest World Gold Council (WGC)report. WGC Director Vipin Sharma feels gold imports may drop to 800 tonnes from 967 tonnes last year. And the mix between the jewellery and gold investment will also change to see investment finding favour. WGC expects the country's gold markets to gain momentum in the festival season this year. Experts, otherwise, feel gold will be in demand and the prices will range between ~31,000 and ~35,000 per 10g till June 2013. So, you could keep accumulating gold in small portions across price levels.

Which is the most cost-effective way? If you ask the experts, they would unanimously favour paper gold more than physical gold — because, besides storage and safety issues, physical gold is costlier, too.

Sample this: If you want to invest ~10,000 in gold coin or bar this Diwali, banks will charge you 10-15 per cent higher than the market price. Jewellers will price it 5-10 per cent higher. The post office charges a premium of 15-20 per cent on gold coins. This means you lose between ~500 and ~2,000 if you go for any of these.

Instead, if you take the gold ETF route, your cost of investment will be ~500. Here's the break-up: Asset management companies charge one per cent as expense ratio (percentage of the assets spent to run a fund), demat account (a must for investing in gold ETFs) levies a maintenance fee of up to ~450 a year, there is a small transaction fee (for transacting through the demat account) at ~1 per lakh of transaction and a brokerage fee of up to 0.5 per cent.

If you opt for Motilal Oswal's ETF in lieu of physical delivery, you have to shell out an extra amount in case you redeem less than 1,000g of gold. You will have to pay ~750 per 10g of gold and ~250 per 100g of gold. In this case, your total cost will be between ~750 (500 + 250) and ~1,250.

The good part is mutual fund houses (like Reliance Mutual Fund, Quantum Mutual Fund, Religare Mutual Fund, IDBI Mutual Fund) now allow you to invest systematically.

However, if you invest through another mutual fund instrument, gold savings funds, you will need only ~150 a year, as the only cost levied is the expense ratio of 1.5 per cent. Gold savings funds are 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," says Hemant Rustagi of Wiseinvest Advisors.

In comparison, e-gold, according to the National Spot Exchange's website, levies a transaction cost of ~20 per lakh of transaction, a storage cost of 60 paise per month per unit (which, if not paid, attracts an interest of 15 per cent a year — equal to interest cost for apersonal loan), delivery charge of ~200 per delivery/lifting (irrespective of number of coins/bars involved in the delivery instruction), making, packaging and refinery certification charges of ~200 (for eight- and 10g bars and coins) and ~100 for a 100g one. Also, you need to pay VAT/GST and other local taxes like octroi (0.1 per cent for Mumbai), if any, as may be applicable at the place of delivery on that date. According to the current rates, VAT will be one per cent of the value of goods.

Total cost comes to ~536. How? Assuming the total value of gold stands at ~10,000 and you hold 10 units, VAT and Octroi cost will be ~100 and ~10, respectively, and the storage cost will be ~6 per month. Add to that, transaction cost of ~20, delivery charge of ~200 and making charge of ~200 (for a 10g coin).

Therefore, a cost-effective investment avenue for buying gold this Diwali can be gold saving funds. Besides, you don't even need ademat account and can invest systematically in these funds. However, the problem with these is that they invest in gold ETFs of the fund house and, so, might not always outperform the ETF with a significant margin.

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1.ICICI Prudential Tax PlanInvest Online

2.HDFC TaxSaver Invest Online

3.DSP BlackRock Tax Saver Fund Invest Online

4.Reliance Tax Saver (ELSS) Fund Invest Online

5.Birla Sun Life Tax Relief '96 Invest Online

6.IDFC Tax Advantage (ELSS) Fund Invest Online

7.SBI Magnum Tax Gain Scheme 1993 Invest Online

8.Sundaram Tax Saver Invest Online

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Birla SunLife Manufacturing Equity Fund

The Make in India program was launched by Prime Minister Naredra Modi in September 2014 as part of a wider set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. The primary motive of the campaign is to encourage multinational as well domestic companies to manufacture their products in India. This would create more job opportunities, bring high-quality standards and attract capital along with technological investment to bring more foreign direct investment (FDI) in the country.   Why India as the next manufacturing destination?   The rising demand in India along with the multinational's desire to diversify their production to include low-cost plants in countries other than China, can help India's manufacturing sector to grow and create millions of jobs. In the words of our Honourable Prime Minister- Mr. Narendra Modi, India offers the 3 'Ds' for business to thrive— democracy,...
Read more

Kisan Vikas Patra - KVP

  Kisan Vikas Patra (KVP) First launched in 1988, the Kisan Vikas Patra (KVP) is one of the premier and popular saving scheme offering from the Indian Postal Department. This product has had a very chequered history- initially successful, deemed a product that could be misused and thus terminated in 2011, followed by a triumphant return to prominence and popular consumption in 2014. The salient features of KVP are as follows- The grand USP- Money invested by the applicant doubles in 100 months (8 years, 4 months). KVPs are available in the following denominations- Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. The minimum purchase value for the KVP is Rs.1000. There is no maximum limit. KVPs are available at all departmental post offices across India. These certificates can be prematurely encashed after 2 ½ years from the point of issue. KVPs can be transferred from one individual to another and from one post office to another. ----------------------------------------------------- Inve...
Read more

Mutual Fund Review: Reliance Regular Savings Equity

    Despite high churn, Reliance Regular Savings Equity has managed to fetch good returns   In its short history, this one has made its mark. Though its annual and trailing returns are amazing, the fund started off on a lousy note (last two quarters of 2005). It managed to impress in 2006 and was turning out to be pretty average in 2007, till Omprakash Kuckian took over in November 2007 and wasted no time in changing the complexion of the portfolio. Exposure to Construction shot up to 28 per cent with almost 21 per cent cornered by Pratibha Industries and Madhucon Projects . Exposure to Engineering was yanked up (18.50%) while Financial Services lost its prime slot (dropped to 6.69%) and Auto was dumped. That quarter (December 2007), he delivered 54.66 per cent (category average: 25.70%).   When the market collapsed in 2008, thankfully the fund did not plummet abysmally. But even its high cash allocations could not cushion the fall which hovered around the category average. ...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

How to generate a UAN Online

Best SIP Funds Online   In order to make Employees' Provident Fund (EPF) accounts portable, the Employees' Provident Fund Organisation (EPFO) had launched the facility of Universal Account Number (UAN ) in 2014. Having a UAN is now mandatory if you have an EPF account and are contributing to it. So far, you got this number from your employer and every time you changed jobs, you had to furnish this number to the new employer.  However, in order to make it easier for you to get a UAN , and without your employer's intervention, the EPFO now allows you to go online and generate a UAN on your own. This facility can be used by freshers, or new employees, who are joining the workforce as well as by employees who have older EPF accounts but do not have a UAN as yet. As a new employee, you can simply generate a UAN and provide the number to your employer at the time of joining, when you need to fill up forms for your EPF contribution. As per a circula...
Read more
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