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50-Year-Old: Will Buying Rs.15,000 in Gold Now Yield Good Returns in 5-6 Years?

Ramalingam

Ramalingam Kalirajan  |8862 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

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 - Jul 08, 2024Hindi
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Namaste Sir, Can Purchasing Gold of 15000 from now, give good return in next 5/6 years.

Ans: Investing in gold is a popular choice. It provides a hedge against inflation and economic uncertainties.

Historical Performance of Gold
Stability and Growth
Gold has shown consistent growth over long periods.

It tends to perform well during economic downturns.

Volatility
Gold prices can be volatile in the short term.

Over 5-6 years, it usually stabilizes and provides decent returns.

Analyzing Gold's Potential
Economic Factors
Global economic conditions affect gold prices.

Geopolitical tensions often drive gold prices up.

Inflation Hedge
Gold is an excellent hedge against inflation.

It retains value even when the currency value drops.

Comparing Gold with Other Investments
Equity Mutual Funds
Higher Growth Potential: Equity funds can provide higher returns.

Active Management: Managed by professionals for optimal returns.

Debt Funds
Stability: Lower risk compared to equities.

Fixed Income: Provides steady, albeit lower, returns.

Investing in Gold: Methods
Physical Gold
Tangible Asset: Can be held in the form of jewellery or coins.

Storage Costs: Requires secure storage, which may incur costs.

Gold ETFs
Ease of Trading: Traded on the stock exchange.

No Storage Costs: Eliminates the need for physical storage.

Sovereign Gold Bonds (SGBs)
Interest Income: Offers annual interest apart from capital appreciation.

Tax Benefits: Tax exemptions on redemption after maturity.

Disadvantages of Direct Gold Investment
Physical Gold
Making Charges: Adds to the cost when buying jewellery.

Security Concerns: Risk of theft or loss.

Gold ETFs
Market Dependent: Prices can fluctuate based on market conditions.

No Tangible Asset: Lacks the physical ownership aspect.

Diversifying Your Portfolio
Balanced Approach: Combine gold with equity and debt funds.

Risk Management: Diversification reduces overall investment risk.

Assessing Your Investment Horizon
5-6 Years Perspective
Gold can be a good investment for 5-6 years.

It may not offer the highest returns but provides stability.

Best Practices for Investing in Gold
Regular Investment
Invest regularly to average out the cost.

Consider a systematic investment plan for gold ETFs or SGBs.

Monitoring Market Conditions
Keep an eye on economic indicators.

Adjust your investments based on market trends.

Final Insights
Investing Rs. 15,000 in gold regularly can yield good returns over 5-6 years. Gold acts as a hedge against inflation and economic uncertainties. While it may not provide the highest returns compared to equities, it offers stability. Diversify your portfolio by combining gold with equity and debt funds. Regularly monitor your investments and adjust based on market conditions.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in
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.
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Ramalingam

Ramalingam Kalirajan  |8862 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 06, 2024

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Sir I want to invest 1 lac in gold for 5 years. Pl suggest me where I should invest.Regards Kumar Rajesh
Ans: Dear Kumar Rajesh,

Thank you for reaching out with your query about investing in gold. It's great to see your interest in diversifying your investment portfolio.

Investing in gold can be a prudent strategy to hedge against economic uncertainties and preserve wealth over the long term. Let's explore some options for investing in gold:

• Gold ETFs (Exchange-Traded Funds): These are mutual fund schemes that invest in physical gold bullion. They offer the convenience of buying and selling gold units through the stock exchange.

• Gold Savings Funds: These funds invest in gold ETFs and may also allocate a portion of their assets to debt instruments. They offer the flexibility of SIPs (Systematic Investment Plans) for regular investments.

• Sovereign Gold Bonds (SGBs): Issued by the Reserve Bank of India (RBI), SGBs are government securities denominated in grams of gold. They offer a fixed interest rate along with the potential for capital appreciation linked to the price of gold.

• Physical Gold: You can also consider investing in physical gold in the form of coins, bars, or jewelry. However, keep in mind the associated storage and security concerns.

When deciding where to invest your 1 lakh for 5 years, consider factors such as liquidity, convenience, and your risk appetite. Each investment option has its pros and cons, so it's essential to choose one that aligns with your financial goals and preferences.

Remember to conduct thorough research and consult with a financial advisor if needed to ensure you make an informed decision. Investing in gold can be a valuable addition to your investment portfolio, providing diversification and stability.

Best wishes on your investment journey!

..Read more

Ramalingam

Ramalingam Kalirajan  |8862 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 02, 2025

Asked by Anonymous - Jan 02, 2025Hindi
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Is this the right time to buy gold? What is the best way to invest in gold to get good returns?
Ans: Gold has always been a preferred asset for Indian investors. It serves as a hedge against inflation and economic uncertainty. The decision to invest in gold depends on your financial goals and portfolio requirements. Let’s explore the timing, benefits, and best ways to invest in gold.

Benefits of Gold as an Investment
Hedge Against Inflation

Gold protects purchasing power during inflationary periods.
It retains value even when currency depreciates.
Portfolio Diversification

Gold provides stability in a diversified portfolio.
It has a low correlation with equity markets, reducing overall risk.
Crisis-Resilient Asset

Gold performs well during global economic or geopolitical crises.
It acts as a safe haven during financial instability.
When Is the Right Time to Buy Gold?
Economic Uncertainty

During global or local financial crises, gold prices tend to rise.
Buy gold when markets are volatile and equity markets are uncertain.
Inflationary Environment

Rising inflation reduces the value of money but increases gold prices.
Use gold to protect your wealth against inflation.
As a Long-Term Strategy

Timing the market for gold is difficult and risky.
Accumulate gold gradually over time instead of making a lump sum purchase.
Best Ways to Invest in Gold
Physical Gold

Includes gold coins, bars, and jewellery.
Physical gold has emotional value but comes with storage and safety concerns.
Gold ETFs

Gold Exchange-Traded Funds are convenient and liquid.
They reflect real-time gold prices but lack active management benefits.
Sovereign Gold Bonds (SGBs)

SGBs offer fixed interest along with gold price appreciation.
They are tax-efficient if held until maturity, but liquidity can be a concern.
Digital Gold

Digital platforms allow you to buy gold online in small amounts.
It eliminates storage issues and allows easy transactions.
Actively Managed Funds with Gold Exposure

Mutual funds with a portion allocated to gold provide diversification.
Actively managed funds perform better than pure gold funds in terms of risk-adjusted returns.
How Much Gold Should You Hold?
Optimal Allocation

Limit gold allocation to 5-10% of your total portfolio.
This ensures diversification without overexposure.
Balanced Approach

Avoid over-reliance on gold as it doesn’t generate regular income.
Focus on balancing growth assets like equity and stability assets like debt.
Tax Implications of Gold Investments
Physical Gold

Gains are taxed as per your income slab if sold before 3 years.
After 3 years, LTCG is taxed at 20% with indexation benefits.
Sovereign Gold Bonds

Interest from SGBs is taxable as per your income slab.
No capital gains tax if held until maturity.
Gold ETFs

Taxed similarly to physical gold gains.
Final Insights
Gold is a valuable addition to any portfolio when used wisely. It is not suitable as a primary growth asset but works well as a stabiliser. Consider your financial goals and diversify investments across asset classes for maximum benefit.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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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.

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