Market Secrets Investment Series-Investing in Gold

Market Secrets Investment Series-Investing in Gold

Importance of Investing in Gold

  • Portfolio diversification
  • Longest living currency ever
  • All central banks still holds gold
  • Limited availability

Different ways of investing in Gold

  • Physical Gold
  • Gold Futures in Commodities market
  • Gold ETF
  • Gold Mutual Funds
  • Sovereign Gold Bonds

Investing in Physical Gold

Pros:

  • No Lock-in Period
  • No Paper work

Cons:

  • Additional making charges
  • Risk of theft
  • Storage costs
  • Tax(GST) on buying and selling
  • Capital Gains tax on returns

Investing in Gold Futures
Pros:

  • No Paper work, completely online
  • No Demat charges
  • No Lock-in period

Cons:

  • Futures contract – Have to buy & sell each month
  • Transaction charges are high, suitable for trading & not investing

Investing in Gold ETF
Pros:

  • No Paper work, completely online
  • No Lock-in period
  • No storage cost, no fear of theft
  • No frequent transaction cost

Cons:

  • Transaction charges are still high if you are going to accumulate in small quantities each month, suitable for trading & not investing
  • Should have a demat account

Investing in Gold MF: Big No

  • Gold MF invests either in Gold Mining companies (not in actual gold) or it invests in Gold ETFs.
  • Either way, it is not suitable as an investment vehicle.

Investing in SGB – Preferred
Pros:

  • Govt backed – 100% safety
  • No storage cost, no fear of theft
  • Low transaction charges
  • 50 rupees per gram discount from current market price
  • No making charges
  • Capital Gains are tax-free
  • In addition to capital gains, yields 2.5% interest on the investment which is bonus

Cons:

  • 5 Year lock-in (with maturity at 8 years) – but shouldn’t trouble investors
  • Issued: Every few months in tranches, you can opt to buy from secondary market

Investing in SGB – How to?
SGB Current issue:

  • FY2019 – Series-II – 15th to 19th October, 2018
  • FY2019 – Series-III – 5th to 9th November, 2018
  • FY2019 – Series-IV – 24th to 28th December, 2018
  • FY2019 – Series-V – 14th to 18th January, 2019
  • FY2019 – Series-VI – 4th to 8th February, 2019

Where to buy?:

  • Easy way is through existing brokers
  • You can buy from banks & post offices as well
  • Easy way? It is just one click with zerodha

We have explained about this in detail in the video:
https://youtu.be/1Be9X4J7mgI

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