Invest In Tax Saving Mutual Funds Online
The household sector must be incentivised to save in financial instruments, rather than buy gold… I propose to introduce instruments that would protect savings from inflation, especially the savings of the poor and middle classes," Finance Minister PChidambaram had said in his Budget speech this year.
The Reserve Bank of India is expected to soon bring out the details of inflation- indexed bonds. Though reams have been written about this product, it might not be a bad idea to look at it from a consumer's standpoint.
It is vital to check whether these bonds can lead retail consumers away from investing in gold.
Jewellery accounts for about 80 per cent of the demand for gold in India; about 15 per cent is for investment (by way of exchange- traded funds, or ETFs, e- gold, etc). The rest is for industrial use, according to the World Gold Council and GFMS.
Inflation- indexed bonds are complicated products; it would take some time for the market to understand these. Earlier, the markets did not try to introduce these bonds in India. Institutions and pension funds would be the biggest subscribers of these bonds. If inflation- indexed bonds become popular, these could spur innovation in the moribund annuity market, which is expected to take off due to the burgeoning corpus of the National Pension System. It is possible that the retail market, which invests in gold through ETFs, might shift to inflationindexed bonds slowly, as it understanding of the product grows.
However, as this market accounts for only about 15 per cent of the demand, this is unlikely to have an impact on the overall demand for gold, even if a portion of this shifts to bonds. A scenario in which jewellery buyers would shift to bonds looks unlikely.
There are several reasons. For a retail consumer, it is very easy to buy jewellery. Apart from branded jewellers, every locality has neighbourhood jewellers who cater to the entire demand in that locality, including demand for jewellery pieces worth just ₹ 1,000- 2,000. Consumers don't need to sign at umpteen places, open an account or show their PAN card.
Typically, such jewellers also offer to buy back jewellery over the counter, thus offering much- needed funds when required.
Jewellery also serves as a great social tool for consumers, as it displays the family wealth in a socially acceptable manner. Ironically, the Achilles heel of traditional jewellery purchases is its worth as an investment. High making charges and the widespread practice of providing lower- than- promised purity means the jewellery loses 15- 35 per cent of its value as soon as it is bought from a shop. Due to this kind of an up- front hit, the investment won't fare well, irrespective of the gold price in the market.
This is where a rather plausible theory could come into play. A cleverly designed marketing campaign that promotes the worth of hallmark jewellery, or even coins or bars, would shift demand from the highmargin traditional jewellery market.
The theory is hallmarked jewellery (for which wide choices aren't really available) and bars and coins ( that can be displayed on only a few occasions) have less social significance.
Therefore, an increase in demand for these, owing to the marketing campaign, would be more- thancompensated by the fall in demand for traditional jewellery, which would lose attractiveness as an investment. This would be highlighted by contrasts, rather than by directly attacking along ingrained belief on the virtues of gold as an investment.
The question is who would fund this rather unconventional marketing strategy, which, on the flip side, has the potential to increase the demand for hallmarked jewellery without affecting the demand for traditional jewellery?
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 )
- ICICI Prudential Tax Plan Invest Online
- HDFC TaxSaver Invest Online
- DSP BlackRock Tax Saver Fund Invest Online
- Reliance Tax Saver (ELSS) Fund Invest Online
- Birla Sun Life Tax Relief '96 Invest Online
- IDFC Tax Advantage (ELSS) Fund Invest Online
- SBI Magnum Tax Gain Scheme 1993 Invest Online
- Sundaram Tax Saver Invest Online
- Edelweiss ELSS Invest Online
Best Performing Mutual Funds
- Largecap Funds Invest Online
- DSP BlackRock Top 100 Fund
- ICICI Prudential Focused Blue Chip Fund
- Birla Sun Life Front Line Equity Fund
- Large and Midcap Funds Invest Online
- ICICI Prudential Dynamic Plan
- HDFC Top 200 Fund
- UTI Dividend Yield Fund
- Mid and SmallCap Funds Invest Online
- Reliance Equity Opportunities Fund
- DSP BlackRock Small & Midcap Fund
- Sundaram Select Midcap
- IDFC Premier Equity Fund
- Small and MicroCap Funds Invest Online
- DSP BlackRock MicroCap Fund
- Sector Funds Invest Online
- Reliance Banking Fund
- Reliance Banking Fund
- Tax Saver MutualFunds Invest Online
- ICICI Prudential Tax Plan
- HDFC Taxsaver
- DSP BlackRock Tax Saver Fund
- Reliance Tax Saver (ELSS) Fund
- Gold Mutual Funds Invest Online
- Relaince Gold Savings Fund
- ICICI Prudential Regular Gold Savings Fund
- HDFC Gold Fund
