Home > Money > Question
Need Expert Advice?Our Gurus Can Help

How Can I Invest in Gold for My 6-Year-Old Daughter?

Ramalingam

Ramalingam Kalirajan  |8013 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 20, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Jan 11, 2025Hindi
Listen
Money

I want to buy one gram gold every month for my girl child. Currently she is 6 yrs old. Next 15 years I would like to do sip of one gram gold per month. Which is the best way to do it?

Ans: Buying gold monthly for your girl child is a thoughtful plan. It secures her future financially.

Your goal of accumulating gold consistently for 15 years is achievable. A systematic approach is essential.

Key Considerations for Gold Investment
1. Understand Gold’s Role in Your Portfolio

Gold acts as a hedge against inflation.

It adds stability to your portfolio during economic uncertainties.

Gold should not exceed 10–15% of your overall investment portfolio.

2. Focus on Long-Term Value Appreciation

Gold prices fluctuate in the short term but appreciate over time.

A disciplined approach ensures you buy gold at different price points.

3. Prioritise Safety and Purity

Ensure the gold you buy is genuine and certified.

Avoid sources that compromise on quality or transparency.

Best Ways to Invest in Gold
1. Physical Gold

Buying one gram of physical gold monthly is a direct option.

Opt for BIS Hallmarked gold to ensure quality and purity.

Keep your gold secure, as physical gold carries theft risk.

Storing gold in lockers incurs extra charges.

2. Digital Gold

Digital gold allows you to buy gold online in small quantities.

It eliminates the need for physical storage and reduces risk.

Sellers store your gold in insured lockers.

However, some providers charge maintenance or storage fees.

3. Gold Savings Schemes by Jewellers

Many jewellers offer monthly savings schemes.

After the tenure, you can use the accumulated amount to buy gold.

Check for hidden charges and ensure the scheme is reliable.

4. Gold Mutual Funds or Gold ETFs

Gold mutual funds invest in gold bullion or related securities.

They offer flexibility, liquidity, and professional management.

Gold ETFs trade on stock exchanges and have transparent pricing.

Regular funds through a Certified Financial Planner provide better insights and ongoing support.

Avoid direct funds, as they lack expert guidance.

Factors to Evaluate Before Choosing an Option
1. Cost Efficiency

Compare costs like making charges, locker fees, or fund management fees.

Opt for an option that minimises recurring expenses.

2. Liquidity and Accessibility

Digital gold, gold ETFs, and mutual funds are easy to buy and sell.

Physical gold may require additional effort for transactions.

3. Tax Implications

Gold investments attract tax on profits when sold.

Physical gold and digital gold have similar tax rules.

Gold mutual funds or ETFs fall under mutual fund taxation norms.

Building a Comprehensive Plan
1. Start Early and Stay Consistent

Begin your SIP of one gram gold monthly without delay.

Consistency ensures you achieve your target in 15 years.

2. Combine Gold with Other Investments

Diversify your portfolio for better financial security.

Mutual funds, bonds, and FDs can complement gold investments.

3. Monitor and Reassess Periodically

Review your gold investments annually to check progress.

Adjust strategies if market or personal circumstances change.

Ensuring a Secure Future
1. Focus on Financial Education

Teach your child about saving and investing.

This knowledge will help her manage wealth in the future.

2. Build an Emergency Fund

Maintain a separate fund for unforeseen expenses.

This ensures you don’t sell gold prematurely.

3. Insure Your Life and Health

Adequate insurance secures your child’s future even in emergencies.
Final Insights
Investing in gold monthly for your child’s future is a wise choice. With proper planning and execution, you can build a substantial gold reserve. A Certified Financial Planner can guide you in selecting the best option and ensuring it aligns with your overall financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |8013 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 04, 2024

Asked by Anonymous - May 04, 2024Hindi
Listen
Money
Hi Sir, Please advise, I want to invest 2 lakhs in gold (and not physical gold). How do I go about it? (Process, any tax?, and do you suggest a better amount) This is for my child's future and not planning to liquidate atleast for 10 years. FYI, I already have some FD, 20k invested in various MF's, LIC and SSY. I might have to bear home loan now or sooner in time. I am 35 year old working in private firm.
Ans: As a Certified Financial Planner, I recommend investing in gold through gold exchange-traded funds (ETFs) or gold mutual funds.

To begin, you'll need a demat account to invest in gold ETFs, while for gold mutual funds, a regular mutual fund account suffices. Both options provide easy access to gold without the hassle of physical ownership.

Tax implications on gains from gold investments depend on the holding period. Long-term gains (held for over three years) are subject to capital gains tax, while short-term gains are taxed as per your income tax slab.

Considering your child's future and a 10-year investment horizon, allocating 2 lakhs to gold is prudent. This diversifies your portfolio, reducing risk while potentially enhancing returns over the long term.

Given your existing investments and the possibility of a home loan, it's crucial to strike a balance between various investment avenues. Assess your risk tolerance, liquidity needs, and financial goals before making any investment decisions.

By investing in gold through ETFs or mutual funds, you gain exposure to the precious metal's potential upside without the concerns of storage or security associated with physical gold. Regularly review your portfolio and consult with a Certified Financial Planner to ensure it remains aligned with your evolving financial objectives.

..Read more

Ramalingam

Ramalingam Kalirajan  |8013 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 18, 2024

Asked by Anonymous - May 11, 2024Hindi
Listen
Money
Iam 27 yrs old My savings every month is 20000 how to 200 grams gold in coming 20 years for my daughters wedding ?
Ans: Planning for Your Daughter's Wedding: Achieving 200 Grams of Gold in 20 Years

Understanding Your Financial Goal:

Congratulations on planning ahead for your daughter's wedding! It's commendable to prioritize her future financial needs.

Assessing the Goal:

To accumulate 200 grams of gold in 20 years, we need to strategize a disciplined savings plan aligned with your monthly budget.

Analyzing Your Savings Capacity:

With a monthly savings of Rs 20,000, we can explore investment avenues to maximize returns while managing risk.

Setting Realistic Expectations:

It's essential to set realistic expectations regarding the rate of gold accumulation, considering market fluctuations and investment returns.

Investment Options:

We'll explore investment options that offer growth potential over the long term, ensuring the achievement of your target.

Benefits of Regular Investments:

Regular investments through a SIP or other systematic savings plans can harness the power of compounding, amplifying your wealth over time.

Disadvantages of Direct Gold Purchase:

While purchasing physical gold provides a tangible asset, it lacks the potential for capital appreciation and income generation.

Analyzing Gold ETFs:

Gold Exchange Traded Funds (ETFs) offer exposure to gold prices without the hassle of physical storage. However, they carry expenses and market risks.

Benefits of Equity Investments:

Investing in equity mutual funds presents an opportunity for higher returns over the long term, outpacing inflation and enhancing wealth accumulation.

Disadvantages of Index Funds:

Index funds may limit potential returns as they track specific market indices, missing out on opportunities for alpha generation through active management.

Maximizing Returns Through Diversification:

Diversifying your investment portfolio across asset classes like equities, debt, and gold can optimize returns while minimizing risk.

Consultation with a Certified Financial Planner:

Seeking advice from a Certified Financial Planner (CFP) ensures personalized guidance tailored to your financial goals and risk tolerance.

Conclusion:

In conclusion, achieving the goal of accumulating 200 grams of gold in 20 years requires a disciplined savings approach and strategic investment planning. By leveraging regular investments in equity mutual funds and possibly gold ETFs, we can work towards fulfilling your daughter's wedding dreams.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Rajesh Kumar

Rajesh Kumar Singh  |66 Answers  |Ask -

IIT-JEE, GATE Expert - Answered on Feb 19, 2025

Ramalingam

Ramalingam Kalirajan  |8013 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 19, 2025

Listen
Money
I have utilised my sale proceedings and hence the entire capital gains by registering a new flat, but the entire payment is not released to the builder. It will be released in a phased manner as per progress of the building. Do I still need to open a CGAS account and put the unutilized capital gains money there?
Ans: Since you have already registered the new flat and fully committed the capital gains towards its purchase, you do not need to open a Capital Gains Account Scheme (CGAS) account. However, there are some key points to consider:

1. Conditions for Capital Gains Exemption (Section 54 or 54F)
You must invest the capital gains in a new residential property within 2 years (for resale property) or within 3 years (for under-construction property).
Since you have registered the property, your investment is considered "committed" even if payments are made in phases.
The Income Tax Department typically considers the date of agreement/registration as the date of investment, not the date of actual payment.
2. When is a CGAS Account Needed?
A CGAS account is required only if the capital gains money is not used before the Income Tax Return (ITR) filing deadline (July 31st) of the respective financial year.
Since your funds are already allocated towards the flat purchase, you are not required to park them in CGAS, even if disbursement is pending.
3. Ensure Proper Documentation
Keep records of the flat registration, builder agreement, and payment schedule.
Retain proofs of capital gains utilization from the sale proceeds.
If assessed, you can justify that the gains were committed for the property purchase.
Final Insights
Since you have already registered the new flat and the payment schedule is fixed, you do not need a CGAS account. However, ensure that all payments are completed within 3 years to comply with exemption rules. Keep all documents handy in case of future tax scrutiny.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |8013 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 19, 2025

Asked by Anonymous - Feb 19, 2025Hindi
Listen
Money
Is it wise to switch between debt and equity composition within a mixed fund/ULIP depending on the market, for a long term investor? Considering that NAVs will be lower in equity components during market lows and more units could be purchased for the same SIP amount? When the market moves up switch back to get a larger NAV r equity components.
Ans: Switching between debt and equity within a mixed fund or ULIP based on market movements may seem like a smart strategy. The idea is to buy more equity units when the market is down and shift to debt when the market is high. However, in practice, this approach has several risks and limitations.

Here’s a detailed analysis:

1. Challenges of Market Timing
Difficult to Predict Market Lows and Highs

Markets do not move in a straight line.
A dip may continue further, and a peak may not be the highest point.
Many investors switch at the wrong time, missing out on gains.
Emotional Biases Impact Decisions

Fear and greed affect switching decisions.
Many investors switch to debt in panic during a crash and miss the recovery.
Staying invested in equity gives better long-term returns.
ULIPs Have Lock-ins and Charges

ULIP switching may have limits and charges.
Not all ULIPs offer unlimited free switches.
Frequent switching can increase costs and reduce returns.
2. Impact on Long-Term Growth
Compounding Works Best with Consistency

Switching in and out disrupts long-term growth.
Staying in equity for 10+ years gives better returns.
Debt Returns Are Lower

Equity outperforms debt over the long term.
Shifting to debt may reduce overall returns.
Systematic Investments Work Better

SIPs average out market ups and downs.
No need to manually switch between equity and debt.
3. Better Alternatives to Switching
Asset Allocation Based on Goals

If retirement is 20+ years away, equity should be dominant.
If retirement is near, gradually move to debt.
Hybrid Funds Handle Allocation Automatically

Some hybrid funds adjust between debt and equity based on market conditions.
This reduces the need for manual switching.
Investing More During Market Lows

Instead of switching, increase SIPs when the market falls.
This allows more unit accumulation without timing risk.
Final Insights
Switching between debt and equity in a mixed fund or ULIP based on market timing is risky. Long-term investors benefit more from staying invested in equity. Instead of switching, follow a structured asset allocation strategy. Use SIPs to take advantage of market lows rather than manually shifting between asset classes.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |8013 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 19, 2025

Money
I am 33 years old and married, currently earning an in-hand salary of ₹1.6 crore per annum. My financial portfolio consists of: Stock investments: ₹2.2 crore Mutual funds: ₹70 lakh ULIP portfolio: ₹60 lakh (annual premium ₹22 lakh) Gold holdings: ₹50 lakh Loans: ₹23 lakh car loan (EMI ₹38,000) and ₹40 lakh home loan (EMI ₹38,000) I want to ensure that I am on the right path toward financial growth and early retirement. My goal is to achieve financial freedom while maintaining a comfortable lifestyle. Could you provide guidance on: How to optimize my portfolio for higher returns and passive income?
Ans: Your financial position is strong. Your salary is high, and you have a diversified portfolio. However, there is scope for better returns and passive income. A structured plan will help you reach financial freedom faster.

Here’s a detailed breakdown:

1. Review of Your Current Investments
Stock Investments: Rs 2.2 crore
You have a large stock portfolio.

Stocks give high returns but carry risk.

Review the portfolio for weak stocks.

Ensure a mix of large, mid, and small-cap stocks.

Check if some stocks need profit booking.

Reinvest gains into high-potential stocks or mutual funds.

Keep 15-20% of the portfolio in dividend-paying stocks for passive income.

Mutual Funds: Rs 70 lakh
Mutual funds provide stability with growth.

Avoid over-diversification with too many schemes.

Actively managed funds can outperform passive funds.

Check fund performance over 5+ years.

Increase SIPs for long-term wealth creation.

Ensure a balance of equity, hybrid, and debt funds.

Debt funds help with stability but are taxed at your income tax slab.

ULIP Portfolio: Rs 60 lakh (Annual Premium Rs 22 lakh)
ULIPs combine insurance with investment.

Charges are high, reducing overall returns.

Returns from ULIPs are lower than mutual funds.

Consider surrendering and reinvesting in mutual funds.

Use a pure term plan for life insurance instead.

Gold Holdings: Rs 50 lakh
Gold is a hedge against inflation.

It does not generate passive income.

Physical gold has storage and security issues.

Consider gold ETFs or sovereign gold bonds.

Sovereign gold bonds provide interest income.

Loans: Rs 63 lakh (Car Loan Rs 23 lakh, Home Loan Rs 40 lakh)
Your EMIs are Rs 76,000 per month.
Interest on a home loan is tax-deductible.
Car loan interest is an expense, not an investment.
Consider repaying the car loan early.
Continue home loan if the rate is low.
2. Steps to Optimize Your Portfolio
Increase Passive Income
Invest in dividend-paying stocks.

Add high-dividend mutual funds.

Consider corporate bonds for steady returns.

Invest in REITs for rental income without buying property.

Use sovereign gold bonds for extra interest.

Enhance Mutual Fund Investments
Increase SIPs in actively managed funds.

Ensure sectoral and market cap diversification.

Hybrid funds offer stability and good returns.

Debt funds help balance the portfolio.

Review fund performance every year.

Improve Liquidity
Maintain an emergency fund of Rs 25-30 lakh.

Keep it in liquid funds or high-interest savings accounts.

Avoid locking funds in long-term ULIPs or endowment plans.

Reduce Unnecessary Costs
ULIP charges are high; shift to mutual funds.

Car loan has no tax benefit; consider prepayment.

Ensure you are not overpaying for insurance.

Avoid investing in low-return insurance products.

Maximize Tax Efficiency
LTCG on equity mutual funds above Rs 1.25 lakh is taxed at 12.5%.
STCG is taxed at 20%.
Debt fund gains are taxed as per your income slab.
Invest in tax-efficient instruments like ELSS funds.
Use HUF and spouse’s name for tax-saving investments.
3. Financial Freedom Plan
Target Passive Income for Early Retirement
Aim for passive income of Rs 1 crore per year.

Invest in high-yield assets like dividend stocks and debt funds.

REITs and bonds provide stable income streams.

SIPs in equity mutual funds create wealth for future income.

Portfolio Allocation for Financial Growth
Equity: 60-65% (Stocks + Equity Mutual Funds)

Debt: 20-25% (Debt Mutual Funds + Bonds)

Gold: 10-15% (SGBs + Gold ETFs)

Emergency Fund: 5% (Liquid Fund + Savings)

Review and Adjust Yearly
Review stocks and mutual funds yearly.
Exit underperforming investments.
Rebalance portfolio as per risk appetite.
Adjust allocation based on market conditions.
Final Insights
Your financial position is strong. Your income allows you to invest aggressively. Focus on increasing passive income for early retirement.

Shift from ULIPs to mutual funds for better returns.
Increase investments in actively managed equity funds.
Reduce high-interest loans and unnecessary costs.
Diversify across asset classes while maintaining liquidity.
Aim for tax-efficient investments to maximize post-tax returns.
If you follow this structured approach, financial freedom is achievable. A well-balanced portfolio with growth and income assets will ensure a comfortable future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x