WHAT IS YOUR OPENION ON S GOLD BONDS

Ans: Gold can be a valuable addition to your portfolio. It has always been considered an asset that can hedge against inflation and other economic uncertainties. There are three popular ways to invest in gold.

Gold ETFs (Exchange-Traded Funds): Gold ETFs offer easy liquidity, as they are traded on stock exchanges just like stocks. They provide a direct exposure to the price of gold.
Taxation - Profits on the sale/redemption of Gold ETFs or units of gold saving funds bought after 31st March 2013 will be taxed as short capital gains irrespective of the holding period. So, this will be taxed as per an individual’s current tax slab.

Gold Mutual Funds: Gold mutual funds pool investments from multiple investors and provide professional fund management. They are an excellent choice for those who prefer a diversified approach.
Expense ratios and load fees can vary.
It is advisable to keep the investment in gold within 5% to 10% of one’s total investment portfolio.
Taxability is similar to that of Gold ETFs.

Sovereign Gold Bonds (SGBs): SGBs are issued by the Government of India and they provide an additional annual interest income. SGBs are suited for long-term investors who are looking for a safe haven asset and are willing to hold on to their investment for at least 5 years, preferably full 8 years to get the tax advantage of Zero capital gains tax on gains made.
The returns on SGBs are not guaranteed, and they depend on the prevailing market price of gold at the time of sale. There is a lock-in period of 5 years, so you cannot exit your investment before then.

SGBs may be the right choice. If liquidity and trading flexibility are important, consider Gold ETFs. Gold mutual funds are suitable for diversification, doing SIPs and professional management.

Ans: It is a good option if you're looking to invest in gold.

Ans: Sovereign Gold Bonds (SGBs) issued by the RBI can be a good option for long-term investment in gold, depending on your overall financial goals and risk tolerance. Here's a breakdown of the pros and cons to help you decide:

Pros:

Safe investment: SGBs are backed by the Government of India, making them a safe investment.
Assured returns: You get a fixed interest rate (currently 2.5%) on your investment, paid semi-annually, regardless of gold price fluctuations.
Tax benefits: Capital gains at maturity are exempt from tax if you hold the bond till maturity. Interest income is taxable, but not subject to TDS.
Eliminates storage risks: You avoid the risks and costs associated with storing physical gold.
Liquidity: SGBs are tradable on stock exchanges after the initial lock-in period (usually 5 years).
Cons:

Lock-in period: SGBs typically have a lock-in period, limiting your access to the principal amount during that time.
Price volatility: The gold price itself can fluctuate, and you might not get a high return if the price falls significantly during the investment period.
Lower returns compared to other options: SGBs may offer lower returns compared to some stocks or mutual funds over the long term.
Overall, SGBs can be a good fit for investors seeking a safe and reliable way to invest in gold for the long term. They offer a hedge against inflation and currency fluctuations, with the added benefit of regular interest income.

Here are some additional things to consider:

Your investment horizon: If you need access to your money before the maturity period, SGBs might not be the best option.
Your risk tolerance: If you are uncomfortable with price fluctuations in gold, SGBs might not be ideal.
Your portfolio allocation: SGBs should ideally be a part of a diversified portfolio, not your sole investment.
It's wise to do your own research and consult with a financial advisor before investing in SGBs. They can help you assess your risk tolerance and determine if SGBs are a good fit for your financial goals.

Ans: Understanding What 1 Gram Gold Coin Investment Means
You buy physical gold in the form of 1 gram coins.

These coins are available at banks, jewellers, and gold shops.

You may buy for tradition, saving or gifting reasons.

It feels emotionally satisfying for many Indian families.

But real wealth creation from it is very limited.

Real Cost of Buying 1 Gram Gold Coins
Gold coins have making charges built into the price.

Usually, banks and jewellers charge 5% to 10% extra.

You lose money the moment you buy due to extra pricing.

Then you don’t earn any monthly income from this gold.

It just stays idle in your cupboard or locker.

No Use in Emergency
Gold coins are not liquid in urgent times.

You can't sell them at full price quickly.

Buyers deduct melting or resale charges again.

You may get 90% or even less of the value.

This makes them a weak emergency asset.

Not Suitable for Long-Term Growth
Over long periods, gold gives average returns.

It protects against inflation but doesn’t multiply wealth.

For 10 to 15 years, mutual funds create more wealth.

Gold just holds its value, not increases it big.

Gold is passive. Equity-based options are more active.

Storage and Risk Problems
Coins need physical storage and safety.

There's always fear of theft or misplacement.

Bank locker costs extra every year.

If lost, there is no replacement like FD or insurance.

It becomes a burden instead of peace.

Small Amount, Small Impact
Buying 1 gram at a time builds slow quantity.

Even after 5 years, the amount may stay small.

It won’t support your child’s education or retirement.

It may just buy a few grams of jewellery.

For wealth, growth is more important than safety.

What Most People Don’t Notice
Coins from banks cannot be sold back to banks.

Jewellers may reject coins not bought from them.

Resale value is not guaranteed or fixed.

Purity check is needed at resale.

These problems reduce final returns a lot.

Emotional Satisfaction Is Not Financial Wisdom
Buying gold feels good culturally.

But finance works with numbers, not feelings.

Feelings should guide festivals, not investments.

Emotions lead to weak decisions in money matters.

Money must be handled with logic and planning.

Better Alternatives Than Gold Coins
Mutual funds via regular plans give compounding returns.

SIPs grow steadily and suit small investors.

You get expert management and guidance from CFP-MFD.

This is not possible with gold coins.

Active fund managers adjust to markets, gold can't.

Disadvantages of Direct Funds
Many think buying mutual funds directly saves cost.

But without MFD + CFP support, mistakes increase.

Most investors redeem at wrong time emotionally.

Regular plan gives advisor support and investor discipline.

For a long journey, guidance matters more than cost.

Problems With Index Funds
Index funds just follow the market.

They don’t protect during market fall.

They cannot beat the index ever.

Actively managed funds have stronger potential.

Skilled managers aim for better returns than index.

Gold for Gifting, Not Investing
For gifting on weddings or festivals, coins are fine.

But don’t confuse gift item with investment asset.

Gift gold with love. Invest money with purpose.

Keep both actions separate.

That brings clarity in wealth planning.

Don’t Buy Gold Every Month as SIP
Some do monthly gold coin buying like SIP.

This builds low-return portfolio.

Monthly SIP in mutual fund is smarter.

That builds wealth, not just collection.

Coins don’t give power in long run.

If Already Holding Gold Coins
If you already bought coins, keep as is.

Don’t increase your exposure further.

Focus new money on wealth-building assets.

Limit gold to max 5% to 10% of total.

That protects balance and gives growth too.

What You Can Do Instead
Create emergency fund using liquid mutual funds.

Invest monthly in actively managed mutual funds.

Track goals like retirement, child education, car, and home.

Review portfolio every year with a Certified Financial Planner.

Keep insurance separate from investments.

Don’t Depend on Gold for Retirement
Gold doesn’t give monthly income in old age.

No interest, no pension, no regular flow.

You may sell gold, but it may not be enough.

Invest early to avoid such worry in future.

Retirement must be supported with growing assets.

Avoid ULIP and Traditional LIC Plans
If you have ULIP or LIC policy with return goal, rethink.

These offer low returns with high lock-in.

If surrender value is available, consider mutual fund reinvestment.

Discuss with a CFP before final action.

Don’t hold weak products lifelong out of fear.

Gold Is a Tradition, Not a Strategy
It holds value, but not wealth.

Gold is for culture, not compounding.

It is for sentiment, not security.

Wealth strategy needs disciplined investing, not gold buying.

Respect gold, but invest with purpose.

Finally
One gram gold coins are not a smart investment.

They are emotional buys, not wealth creators.

You pay more while buying and lose more while selling.

They stay idle and carry safety risks.

Don’t build your future on shiny metal.

Use mutual funds with certified guidance.

Let your money work harder, not sit idle in gold.

Every rupee you invest wisely builds a better tomorrow.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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