Dhan Ki Baat Episode 14: How To Invest in Gold the Right Way
Dr Gaurav Mashruwala answers questions about investing in gold in this episode of Dhan ki Baat.
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In every episode of Dhan Ki Baat, we provide you with lessons that may help increase your earnings, as well as teach you to better your investments. This week, we shall be talking about investing in gold, a material which is widely considered India’s weakness.
If You Have Gold, Then You Need Not Worry. But...
It is touted that if all the gold present in every household in the nation can be collected, the cumulative amount will be more than enough to repay the country’s debts. Gold is usually stored in households in the form of jewellery, coins or biscuits. Personal Finance Expert Gaurav Mashruwala claims that gold stored in households can be very handy during an emergency, but it will not earn you anything. Secondly, ancestral jewellery can be pretty difficult to sell. So today’s episode is targeted towards understanding the right way to invest in gold, so that your desire to buy gold is alive as you make money from it.
Investing in Gold
There are two ways of investing in gold which not only ensure a steady flow of money but also come with other complimentary benefits, which we shall discuss:
Option No 1- Gold Sovereign Bond
The government is regularly issuing gold sovereign bonds. One can’t tell for how long but investing in gold bonds has 2-3 types of benefits. If you buy it through your DMAT account, then the returns are going to be transferred into your DMAT account directly. It also has an interest of 2-2.5%. This a type of income you can’t earn from physical gold. It has liquidity which means you can earn the exact amount you spent buying it back. If you try to sell off physical gold then you’ll have to pay capital gains tax. But that’s not the same case for gold sovereign bonds.
Option No 2 - Gold Mutual Funds
You can also invest in gold mutual funds. The first point to note is that you have to buy gold worth the amount you’re investing in the mutual fund scheme. Secondly, the gold is deposited in the care of a custodian. So your investment in safe. And thirdly, the price of gold in the market is determined by the ups and downs of NAV.
4 Major Benefits of Gold Mutual Funds
1. Easy Investment
2. Don’t have to buy and hoard physical gold
3. You can withdraw as deemed necessary
4. Gain returns as per market prices
Your Questions
Rajkumar Verma sent his question to dhankibaat@thequint.com
Some mutual fund schemes run gold funds,is it beneficial to invest in such funds than in equities?
Investing in gold funds and equity funds are different things.Both have their place in the portfolio.We can have debt funds, equity funds and even gold funds to some extent.
If you too want to ask a question related to personal finance then write to us at dhankibaat@thequint.com.
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