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Dev Ashish  |48 Answers  |Ask -

MF Expert, Financial Planner - Answered on Sep 22, 2023

Dev Ashish is a fee-only SEBI-registered investment advisor with over 15 years of active experience in the stock market. In 2011, he founded StableInvestor, a platform for personal finance and financial planning.
He provides professional fee-only investment advisory services to small and high networth individuals in order to help them achieve their financial goals.
Ashish's views are regularly published in national business publications. He has an MBA degree from NMIMS, Mumbai and also holds an engineering degree.... more
Asked by Anonymous - Sep 12, 2023Hindi
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what are the tax implications associated with Investing in gold in India, either in its physical form or via sovereign gold bonds (SGBs) and gold exchange-traded funds (ETFs)

Ans: This requires a detailed explanation. I had written a detailed article on this gold taxation aspect. Please check it here - https://stableinvestor.com/2020/06/taxation-gold-capital-gains.html
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  |5260 Answers  |Ask -

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

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Thank you. I have a follow up question about purchasing gold coins for investment. The seller imposes making charges and GST when purchasing gold coins and this reduces the returns on gold coins when you sell it. What is your recommendation to include gold in the portfolio and what percentage of investments should be in gold? Thanks
Ans: Including gold in your investment portfolio can offer diversification and act as a hedge against inflation and market volatility. However, the costs associated with purchasing and storing physical gold, such as making charges, GST, and safe storage costs, can impact your returns. Here are some recommendations on how to include gold in your portfolio and the suggested percentage allocation:

Gold ETFs or Gold Mutual Funds:

Advantages: Gold ETFs (Exchange Traded Funds) and Gold Mutual Funds offer a cost-effective way to invest in gold without incurring making charges or GST.
Allocation: Consider allocating 5-10% of your investment portfolio to gold ETFs or Gold Mutual Funds to diversify your portfolio and mitigate risks.
Gold Savings Fund:

Advantages: Gold Savings Funds invest in gold ETFs and offer the convenience of SIP (Systematic Investment Plan) investments. They also provide the benefit of professional fund management.
Allocation: You can allocate a portion of your monthly SIP towards Gold Savings Funds to accumulate gold over time.
Sovereign Gold Bonds (SGBs):

Advantages: SGBs are government-backed securities denominated in grams of gold. They offer an annual interest rate and capital gains tax benefits if held until maturity.
Allocation: Consider investing in SGBs as part of your fixed income allocation, keeping in mind the lock-in period and liquidity constraints.
Physical Gold Coins or Bars:

Advantages: Physical gold offers tangible ownership and can be a part of your emergency reserve or long-term wealth preservation strategy.
Allocation: If you prefer physical gold, limit the allocation to a smaller percentage (e.g., 1-2% of your portfolio) due to the additional costs and liquidity constraints.
Recommendations:

Diversification: Include gold as a part of your diversified investment portfolio to mitigate risks and enhance overall returns.
Cost Consideration: Opt for cost-effective investment options like Gold ETFs, Gold Mutual Funds, or Gold Savings Funds to avoid high making charges and GST.
Asset Allocation: Maintain a balanced asset allocation based on your risk tolerance, investment goals, and time horizon. A typical allocation to gold ranges from 5% to 10% of the total portfolio.
Regular Review: Periodically review your investment portfolio and rebalance as needed to maintain the desired asset allocation and align with your financial goals.
Consult with a financial advisor to determine the most suitable allocation to gold based on your individual financial situation, goals, and risk tolerance. They can provide personalized recommendations and guidance to help you make informed investment decisions.

..Read more

Ramalingam

Ramalingam Kalirajan  |5260 Answers  |Ask -

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

Asked by Anonymous - May 04, 2024Hindi
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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  |5260 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 24, 2024

Asked by Anonymous - Jul 01, 2024Hindi
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Hello, Hope you are doing well. I would like to know in India is it good to buy and keep Gold coins or bars? Is there any tax/ capital gain during the sale of gold coin or bar? Which is better gold coin or bar?
Ans: Gold is a popular investment in India. It offers a hedge against inflation and economic uncertainty. Let's discuss the pros and cons of investing in gold coins and bars.

Advantages of Gold Coins
Portability: Gold coins are easy to store and transport.

Smaller Denominations: Coins can be purchased in small amounts, making them accessible for small investors.

Design and Collectibility: Coins often have unique designs and can be collectible.

Advantages of Gold Bars
Lower Premiums: Gold bars generally have lower premiums over the spot price compared to coins.

Bulk Investment: Bars are ideal for larger investments as they come in higher denominations.

Storage Efficiency: Bars take up less space compared to an equivalent value in coins.

Tax Implications
Capital Gains Tax: Selling gold coins or bars is subject to capital gains tax. The rate depends on the holding period.

Short-Term Gains: If held for less than 36 months, gains are taxed as per your income tax slab.

Long-Term Gains: If held for more than 36 months, gains are taxed at 20% with indexation benefits.

Wealth Tax: Wealth tax on gold was abolished in 2015.

Investing in Gold Funds
Gold funds are an excellent alternative to physical gold. They offer several advantages over gold coins and bars. Let’s explore why gold funds might be a better choice for you.

Advantages of Gold Funds
Liquidity: Gold funds are highly liquid. You can buy or sell units easily.

No Storage Issues: Unlike physical gold, gold funds don't require physical storage or security.

Diversification: Gold funds often invest in a diversified portfolio of gold-related assets, including gold mining companies.

Ease of Investment: Investing in gold funds is straightforward and can be done through mutual fund platforms or online brokers.

Professional Management: Fund managers handle the investment decisions, offering expertise and research that might be hard to manage individually.

Tax Implications of Gold Funds
Capital Gains Tax: Similar to physical gold, gold funds are subject to capital gains tax.

Short-Term Gains: If held for less than 36 months, gains are taxed as per your income tax slab.

Long-Term Gains: If held for more than 36 months, gains are taxed at 20% with indexation benefits.

No Wealth Tax: Wealth tax on gold funds was also abolished in 2015.

Comparing Gold Funds with Physical Gold
Convenience: Gold funds eliminate the need for physical storage and security concerns.

Transparency: Fund performance is tracked through NAVs (Net Asset Values), making it easier to monitor your investment.

Cost-Effective: Gold funds usually have lower transaction costs compared to buying physical gold.

Diversification: Provides exposure to gold without the risks associated with holding physical gold.

Final Insights
Investment Convenience: Gold funds offer ease of investment and liquidity without physical storage hassles.

Tax Efficiency: Capital gains tax applies, but gold funds manage this efficiently with transparent reporting.

Professional Management: Benefit from professional management and research when investing in gold funds.

Diversification: Consider gold funds for diversification and to avoid the challenges of physical gold.

Gold funds can be a practical choice if you want exposure to gold without the complexities of holding physical gold. Consult with a Certified Financial Planner to align your investment with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..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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