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

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...
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