POSTED BY June 29, 2013 10:53 pm COMMENTS (10)ON
I am currently not having any gold investment in my portfolio, and hence thinking of investing in a gold fund for diversification.
I feel this might be a good time to invest in gold funds due to the crash in gold prices & hence in the NAVs of gold funds. So am thinking of doing a lumpsum investement in Reliance gold fund.
1) Do you think this is indeed a good time to enter into gold (especially since am going for lumpsum investment) ?
2) Would you recommend any other fund better than Reliance gold?
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10 replies on this article “Good time to invest in Gold funds?”
Hmm I see your point. I was presuming it would be same as market. Thanks.
Dear Vaibhav, what ‘ll be the purchase price of Motilal, i can not comment on that. 🙂
I have already purchased thru my Demat a/c.
My query is different –
I have always read that one should go for an ETF which is relatively liquid, so that you have sufficient buyers on exchange when you wish to sell later.
However if one can directly sell these units to the fund house (as Motilal Oswal allows), then why does one need to worry about liquidity?
Dear Vaibhav, if you are having a demat account, please purchase the Gold ETf of your choice directly from the market.
Any suggestions on the above query?
I was under the impression that Gold ETFs can only be bought/sold on the exchange, and that’s the reason one should choose to invest in a relatively liquid ETF.
However Motilal Oswal ETF (MOSt Gold Shares) website says that one can buy/sell their ETFs directly from the mutual fund. Refer ‘Liquidity’ section at this link –
Is this facility available with other ETFs too? If yes, then why does one need to worry about liquidity, since you can then sell (redeem) the units directly to the AMC (like mutual fund) even if market doesn’t have buyers?
>>E-gold through NSEL involves the hassle of creating another Dmat a/c which i wish to avoid, and also wealth tax is applicable
You would need a demat account for buying gold through the ETF route as well. That said I prefer the ETF route too.
Choose your ETF carefully, I chose a traditional trusted provider, but can only convert to physical gold in denominations of 1KG, which in hindsight wasnt the best decision I took.
Thanks Sumit / Bharat!
My current investment horizon is 5-7 yrs.
Yes I read thru the various pros & cons of Gold ETF vs Golf Funds vs E-Gold.
I think I’d prefer Gold ETF since it’ll save me the additional management charges of a Gold Fund of funds, and also allows taking physical delivery (motilal oswal gold ETF provides delivery as low as 10 gms).
E-gold through NSEL involves the hassle of creating another Dmat a/c which i wish to avoid, and also wealth tax is applicable.
if you like to invest gold for long term , say for 10-15 years for any specific goal, please think of the cost for holding the gold in any avenue you like. for gold ETF , the cost of holding is @1% p.a. of the gold value you are holding , and in effect, it will diminish gold weight at rate of @1% of what you hold a year before, irrespective the gold price at the time, as you have not to pay separately for holding the units. for gold fund , you have to pay @1.5 % p.a. . then when you get it redeem, you can not get gold unless you are having 1000units or so. so you must have to pay short term/long term gain tax as per prevailing tax laws, so think also of e- Gold , where you can buy in small quantity ,hold it in demat form , and when you want back in physical gold, you can get even 8gm or so with some cost. there you have to pay demat a/c opening, maintaining, brokerages separately, and there your long term gain is for that more than 3 yrs. compare to 1 yr for gold ETF. you should know and compare the pros and cons of both , e gold and etf gold, and decide.
even you may consider physical gold , if you like to buy gold more 50 gms or more at one go in this slump market, and you are smart enough to buy the same at wholesale rate with purity surety.
Everyone should have around 5-10% gold in portfolio, as it has a negative correlation with equity. But before start investing understand that it may not see another bull run in very near future, and global outlook is also bearish. Experts are saying it may slip to $1050.
So I think one can start investing in gold now for long term outlook or if you have any specific goal, but only through SIP route, never in a lumpsum as it will see more downside from here.