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

Save Tax With Mutual Funds

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       Mutual funds are ideal as long term investment avenues for retail investors. To encourage investments in this avenue, the Government of India offers investors a spate of tax benefits thus ensuring maximum benefit from mutual funds held beyond a year. Sample some of the key benefits and refer to the table for a detailed list of tax rates for different types of schemes ·        Avail deductions under Sec 80C of the Income Tax Act by investing up to a maximum of Rs. 1 lakh in designated Equity Linked Savings Schemes (ELSS). Such investments have a compulsory lock in period of 3 years. ·        First time retail investors in equity with a gross total income of up to Rs. 12 lakh can invest up to Rs. 50,000 in specific MF schemes un...

How much to invest in gold ?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) Let your motivation dictate the share of the yellow metal in your portfolio Enough has been said and written about gold as an investment option. The latest argument is that the craze for gold among Indian households is endangering our country's balance of payments. The policymakers are busy trying to find ways of discouraging investment in gold, but if households keep the common good in mind, they would be paying the market price for gas cylinders as they do for, say, their mobile phone bills. After all, private decisions are driven by private motives. So, how should a household look at gold from its own perspective? Gold is primarily acquired for its merit as a store of value. Even if the worst crisis hits a family, the gold that it holds could be put to use anywhere in th...

LIC's JEEVAN SHIKHAR

  LIC's Jeevan Shikhar is a participating, non-linked, saving cum protection single premium plan wherein the risk cover is ten times of Tabular Single Premium. The proposer will have an option to choose the Maturity Sum Assured. The premium payable shall depend on the chosen amount of Maturity Sum Assured and age at entry of the life assured. This plan also takes care of liquidity need through its loan facility. The plan will be open for sale for a maximum period of 120 days from the date of launch. 1.   BENEFITS   : a) Death Benefit: On death during first five policy years: Before the date of commencement of risk   :   Refund of Single Premium without interest. Single Premium mentioned above shall not include any extra amount if charged under the policy due to underwriting decision and taxes. After the date of commencement of risk   : "Sum Assured on Death" equal to 10 times the tabular single premium shall be payable. On death after completion of five policy years but b...

IDFC Nifty ETF

IDFC Mutual Fund has launched IDFC Nifty ETF . The fund seeks to provide returns tha, before expenses closely correspond to the total return of the underlying index, subject to tracking errors. The minimum investment is `5,000 and the NFO closes on 30 September. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. Reliance Tax Saver (ELSS) Fund 10. Birla Sun Life Tax Plan Invest in Best Performing 2016 Tax Saver Mutual Funds Online Invest Online Download Application Forms For further information contact Prajna Capital on 94...

UTI Fixed Term Income Fund Series XVI - I

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   UTI Fixed Term Income Fund Series XVI - I (366 days). New Fund Offer opens on : Friday, August 16, 2013 New Fund Offer closes on : Monday, August 19, 2013 Allotment Date : Tuesday, August 20, 2013 Scheme Tenure : 366 days Maturity Date : Thursday, August 21, 2014 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. Inve...
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