Skip to main content

Should you buy Gold now?

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

The gold prices have crashed and as a result investors are a worried lot. An asset class that has been shinning for long has suddenly lost its sheen. No wonder, there are mixed reactions from investors. While on the one hand there are investors who are not sure about what to do with their investments in gold, on the other hand there are those who are wondering whether there is an opportunity to buy gold at the current prices and make a quick buck.

While investors' dilemma is understandable, one of the factors that they need to consider while deciding on whether to buy, sell or hold investments in gold is the reason for investing earlier as well as at the current levels. A better understanding of the role of gold in their asset allocation process can help them tackle the complexity of the current situation. In fact, knowing that there is more than one reason to have gold in their portfolios at all times could soothe the frayed nerves of investors.

First, there is a merit in making gold an integral part of the portfolio as it has a negative correlation with other preferred asset classes. Second, since gold is both a commodity as well as currency, the sources for its demand are far more diverse. A wide range of buyers like the jewellery sector, financial institutions, manufacturers of industrial products as well as various investment channels including coins and bars, gold ETFs and e-gold also make liquidity risk very low. Third, investing in gold does not carry a credit risk.

Of course, one faces the risk of price fluctuations. However, the volatility can be tackled by investing systematically as well as by choosing the right way to invest in the gold. Remember, buying paper gold through options like gold ETFs and gold savings funds can be a simple and tax efficient way.

Another objective of investing in gold could be to accumulate it for a special occasion like children's marriage. Therefore, for someone who has been investing in gold for this very purpose with a time horizon of say 10-15 years, there is no reason to panic. In fact, the periods of extreme volatilities could help him in bringing his average cost down.

Therefore, all those investors who have been investing in gold in a disciplined manner and as a part of their asset allocation process would do well to not only hold on their investments in gold but also continue investing systematically through their defined time horizon. There could be prolonged periods of not-so-encouraging performance, but that is understandable for an asset class that has been giving phenomenal returns over the last decade or so. However, it would be prudent to have a close look at the level of exposure in gold vis-a-vis their overall portfolio size. Ideally, the exposure to gold should not be more than 10 percent of the portfolio at all times.

While a disciplined approach to investing in an asset class like gold can benefit investors over time, any attempt to make ad hoc decisions can be risky. Hence, anyone who may be considering taking advantage of the steep fall in the gold prices to make quick money will do well to remember that such decisions can backfire at times. The key deciding factor should the likely contribution of an investment decision to the long-term prospects of the portfolio.

Then there are investors who have been investing in gold with a sole objective of benefiting from the momentum in the gold prices. As always, in the absence of any defined time horizon, decision making can be a little tricky. Therefore, considering that gold prices can fall further from the current levels and that the volatility in the gold prices is likely to continue for some time, it may be time for them to prune the exposure and invest elsewhere.


As is evident, gold as an asset class has a lot to offer to serious long-term investors. Therefore, it is important for them not to panic and carry on with their investment process. Of course, it would be prudent to have a realistic expectation in term of returns from here on.

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 TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS 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

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...
Read more

ING Mutual Fund - Invest Online

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     Information Updated As On December 30, 2013   Name of the Mutual Fund ING Mutual Fund Date of set up of Mutual Fund February 11, 1999 Name(s) of Sponsor ING Group Name of Trustee Company ING Mutual Fund Name of Trustees Mr. Chetan Mehta - Associate Trustee Mr. Haresh M Jagtiani - Independent Trustee Mr. Sunil Gulati - Independant Trustee Mr. Surinder Mohan Pathania - Independent Trustee ...
Read more

ICICI Prudential Balanced Fund

 ICICI Prudential Balanced Fund scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. An impressive show in the last couple of years has propelled this fund from a three-star to a four-star rating. The fund has traditionally featured a high equity allocation, hovering at well over 70 per cent, which is higher than the allocations of the peers. But in the last one year, the allocation has been moderated from 78-79 per cent levels to 66-67 per cent of the portfolio. ICICI Prudential Balanced Fund appears to practise some degree of tactical allocation based on market valuations. Within equities, well over two-thirds of the allocation is parked i...
Read more

Tax Planning: Income tax and Section 80C

In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act. Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:   Provident Fund (PF) & Voluntary Provident Fund (VPF) Provident Fund is deducted directly from your salary by your employer. The deducted amount goes into a retirement account along with your employer's contribution. While employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards section 80C investments. You can also contribute additional amount through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and interest earned is tax-free. Public Provident Fund (PPF) An account can be opened wi...
Read more

Fortis Mutual Fund

Fortis Mutual Fund, a relatively new player, it is still to prove its case and define its position in the industry. In September 2004, it came onto the scene with a bang - three debt schemes, one MIP and one diversified equity scheme. And investors flocked to it. Going by the standards at that time, it had a great start in terms of garnering money. Mopping up over Rs 2,000 crore in five schemes was not bad at all. The fund house has not been too successful in the equity arena, in terms of assets. Though it has seven equity schemes, it is debt and cash funds that corner the major portion of the assets. Most of the schemes are pretty new, and the two that have been around for a while have a 3-star rating each. The last two were Fortis Sustainable Development (April 2007), which received a rather poor response, and Fortis China India (October 2007). Fortis Flexi Debt has been one of the better performing funds, after a dismal performance in 2005. It currently has a 5-star rating. None ...
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