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Outsource your Stock Market Entry / Exit decisions to professionals How do Balanced Advantage Funds work? They Increase or decrease the allocation to equity-based pre-defined criteria* *Each fund house has its own in-house research-backed criteria and asset allocation strategy Why outsource the market entry/exit decision to BAF? Choosing the right Asset Allocation is not easy Keeping up with the markets is difficult How to decide – “When to enter and when to exit? It’s full-time work that needs significant resources Fund Houses take a systematic, research-backed Asset Allocation approach Elimination of psychological barriers Tax efficient as they are taxed as per Equity Oriented Funds Investors are recognizing this category Nifty 18K in Oct 2021 to 18K in May 2023 ICICI Prudential BAF Performance BAF Advantages: Automatically move between equity to debt & debt to equity Convenience and Simplicity Potential for favorable risk-adjusted returns Tax Efficiency "Like the diverse brushstrokes of artists, each Mutual Fund has its own unique approach to Dynamic Asset Allocation, crafting a variety of investment strategies guided by the skilled hands of their fund managers“ Would you like to understand if this suites for your requirement? And which fund is better for you? Click on "Contact Us" menu and request for a call back.

A sound investment strategy can aid you to increase your wealth and could secure your family’s financial future. ULIPs (unit-linked insurance plans) and mutual funds are both attractive investment vehicles for investors looking to create wealth in the long-term. However, comparing mutual fund investments with ULIPs is like comparing oranges with apples. Let’s understand the difference between ULIPs and mutual funds. What is a mutual fund? A mutual fund is a financial vehicle wherein an AMC (Asset Management Company) manages the money of several investors. The collected funds are further invested in different securities such as bonds, stocks, and money market instruments, etc. The performance of your mutual fund scheme is directly proportional to the performance of these underlying securities. Mutual funds are pooled investments that are managed by professionals known as fund managers. It is similar to boarding a flight, wherein the pilot takes all the passengers to a particular destination. In this instance, the pilot is the fund manager, the airport is the mutual fund scheme, and the passengers are the investors. Fund managers are mutual fund experts who have in-depth knowledge about the complexities and volatilities of the financial markets and make appropriate asset allocation decisions. What is a unit-linked insurance plan? A unit-linked insurance plan, or ULIP, is a combination of investment and insurance. ULIPs are insurance policies that offer an investor the potential to create wealth while simultaneously providing them with the security of a life cover. Under ULIPs, a part of the premium goes towards providing the investor with a life insurance cover. These charges are called mortality charges. The rest is pooled and invested in debt or equity instruments or a combination of both to help create wealth in the long-term. Difference between ULIPs and mutual funds To gain some perspective on ULIPs and mutual funds, you must first understand the difference between the two investment products. Following are some of the significant differences between mutual funds and ULIPs. 1) Investment objective A mutual fund is a pure investment product that offers the sole benefit of creating wealth and has potential to generate reasonable returns in the long-term. On the other hand, ULIPs are primarily an insurance product with the added advantage of being a market-linked investment. 2) Return on investment The returns on ULIPs can be dynamic as they invest in equity, debt, or a combination thereof. The returns on mutual funds vary too depending on the type of scheme opted for and can range from low to high. There is no guarantee of minimum returns in mutual funds 3) Lock-in period As ULIPs are insurance products, insurers define lock-in period of generally 5 years for these investments. Investors cannot redeem their investments before this lock-in period is over. On the other hand, most mutual funds, especially open-ended mutual funds, do not have a lock-in period, except for ELSS funds, which have a lock-in period of 3 years to be able to provide tax benefit under 80C (section limit of 1,50,000) 4) Transparency Recent regulatory amendments by the IRDAI have made ULIPs quite transparent; they now provide upfront information on fund allocation. In the case of mutual funds, fund houses are mandated to provide a detailed report of the mutual fund investments. Financial markets’ regulator SEBI has advised fund houses to provide detailed information on asset allocation, portfolio holding, active fund manager(s), fees charged, etc., w.r.t different schemes. 5) Taxation Tax on mutual funds: LTCG (long-term capital gains) and STCG (short-term capital gains) tax of 10% and 15% (plus applicable surcharge and cess) , respectively, is levied on equity funds depending on the holding period. For debt mutual funds, LTCG tax is levied at 30% (plus applicable surcharge and cess) after indexation, while STCG tax is levied according to the investor’s income tax slab. Equity-Linked Savings Scheme (ELSS) funds qualify for a tax deduction of up to Rs 1.5 lac under Section 80C of the IT Act, 1961 Tax on ULIPs: Returns on ULIPs are tax-free under Section 10(10D) of the Income Tax Act, 196. 10(10D) basically says, if the sum assured is less than the 10 times of annual premium, then 10(10D) is not applicable. Especially, if an insured charged with additional loading while issuing the insurance policy, then the returns are taxed. 6) Expense Investing in mutual funds incurs professional management fee as well as operational fee, collectively referred to as an expense ratio. Some mutual funds also charge an exit load, i.e. a charge for leaving the scheme. When it comes to ULIPs, the charge levied includes premium allocation charge, fund management charge, administration charge, mortality charge, etc. 7) Risk cover Under ULIPs, nominees are compensated for the sum insured in case of the policyholder’s untimely demise. However, in the case of mutual funds, the investments are transferred to the nominee. 8) Risk cover Under ULIPs, nominees are compensated for the sum insured in case of the policyholder’s untimely demise. However, in the case of mutual funds, the investments are transferred to the nominee. 9) Charges in Mutual Funds vs ULIP Following charges may be applicable in ULIPs and Mutual Funds ULIPs: Switching Charges: If you are switching the invested amount from one fund to another fund, there could be charges levied Fund Management Charge (FMC): The daily unit price is calculated allowing for deductions for the fund management charge, which is charged daily. This charge will be subject to the maximum cap as allowed by IRDAI Mortality Charge: Every month we levy a charge for providing you with the death benefit in your policy. This charge will be t a k e n b y c a n c e l l i n g u n i t s proportionately from each of the fund(s) you have chosen. The mortality charge and other risk benefit charge are guaranteed for the entire duration of the policy term. Partial withdrawal charge: This will be levied on the unit fund at the time of part withdrawal of the fund during the contract period Policy Administration Charges & Premium Allocation Charges are levied during discontinuation period Discontinuation charges may be applicable if premium payments are discontinued. Mutual Funds: Exit Load: When investors exit a mutual fund scheme within a specific period from the date of purchase, an exit load is levied on these individuals. AMCs impose an exit load on investors to discourage them from opting out of a mutual fund scheme prematurely. Moreover, this fee allows fund houses to reduce the volume of withdrawals. Generally, fund houses charge an exit load of around 1% on redemption value. It is common for the fund houses to charge exit load if you as an investor redeem the units within a year. While there is no exit load is charged post one year of investment in the same scheme. Expense Ratio This charge is synonymous with mutual fund fees and charges for most investors. Expense ratio is an annual fee, which is expressed as a percentage of a fund’s daily net assets. It is charged by an asset management company for managing an MF scheme. Therefore, it covers all the costs of managing and running a mutual fund scheme. Such costs include sales and marketing expenses, administration fees, distribution fees, fund manager’s fees, etc. The expense ratio is calculated by evaluating a scheme’s total expense incurred and dividing this figure by an AMC’s total assets under management (AUM). Mutual funds are the ideal investment choice under the following circumstances: If someone wants to invest for a short- or long-term goal If someone wants to build your wealth If someone is looking for reasonable returns on investments If someone believes ELSS returns are better even after LTCG and want to have less lock-in period. ULIPs are the ideal investment choice under the following circumstances: If someone is looking for a tax-saving investment under 10(10D) If someone is seeking a life insurance policy If someone wants to invest for a long-term horizon. ULIP vs. mutual fund The following table provides elaborates on mutual funds vs. unit-linked insurance plans: The aforesaid table is shown for illustration and understanding purposes only. Investments in mutual funds relatively carry higher risks. There is no assurance or guarantee of minimum returns in mutual funds Which is better? Mutual fund or ULIP? The decision to invest in mutual funds or ULIPs solely lies with the investor. Before investing in any instrument, an investor should analyze their financial needs. The right investment option is one that aligns with the investor’s financial goals, risk profile, and investment duration. For instance, if investments needs to be liquid, one can consider investing in mutual funds as ULIPs have a minimum lock-in period of 5 years. Of course, not all mutual funds are liquid, and tax saving mutual funds (ELSS funds) have a lock-in period of 3 years. On the other hand, if someone is looking for insurance as well as wealth creation, one can consider investing in ULIPs. In a nutshell, the primary aim of ULIPs is to insure the investor’s life, while the primary goal of mutual funds is wealth creation. Choose wisely, happy investing! The information given here is neither a complete disclosure of every material fact of Income-tax Act 1961 nor does it constitute tax or legal advice. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme

#healthinsurance #healthinsurancetypes #healthinsurancefeatures Health insurance is a medical insurance policy that offers financial coverage for medical expenses when policyholder is hospitalized. The health insurance plan ensures cashless treatment, reimbursement of medical expenses & day-care hospitalization along with comprehensive coverage for pre & post hospitalization expenses etc. Types of Health Insurance Plans: Individual Health Plans It offers a good number of benefits and additional coverage such as cashless hospitalization, compensation, and daycare assistance. It comes with add on covers that will help you to enhance your health insurance plans. It will be good for you as an individual. Family Health Insurance Plans It is the ultimate and the best plan which will cover you and your family at one single plan and against a single amount of premium. The sum insured should be taken as per your convenience as it will be divided equally among all. It will give you benefits, and you can track each and everything at a single plan. Some companies provide either one time or unlimited restorations of sum assured. Top-up Plans If someone has individual / family health insurance plans, you can enhance the coverage using top-up plans. They provide very high coverage for nominal price. The higher the base cover (also called as deductible), lower the top-up plans premiums. Top-up plans are activated only after deductible amount is fully spent from base insurance plan. Senior Citizen Health Plans It provides coverage above the age of 60. It covers the hospitalization expenses, in-patient covers, OPD expenses, and daycare expenses, etc. And gives you the tax exemption under Section 80D.Generally,these policies have co-payment (certain % of the money is paid by the policy holder) unless specified. Critical Illness Plans It offers the lump-sum amount in cases where the insured is diagnosed with critical illness problems such as kidney failure, heart-related problem, cancer, paralysis, etc. It carries huge benefits to cover the income loss or additional expenses that can not be covered by any insurances. Personal Accident Plans It offers insurance coverage in case of an accident that leads to partial or full disability or sometimes to death. It covers the hospitalization and bears all the medical health expenses. A fixed amount of benefit is given to his or her family. Benefits One should know the limits, sub-limits, waiting periods, inclusions and exclusions, co-payment conditions while buying a product. • Cashless Hospitalization It is the most appreciated thing while you get an insurance policy from the insurance provider. It provides cashless treatment in the network hospitals. • Less premium high coverage It is a good and a plus point that insurance helps you in getting a high coverage and a high sum insured with a low amount of premium policy. • Financial assistance One can easily get financial assistance if he or she has the coverage and have the insurance policy. It will be helpful and can save your hard-earned savings to get collapsed. • Transfer your risk You can easily transfer your risk from yourself to the insurance company. • Tax benefits You can get the tax benefits under your health Insurance plans under the section 80D. So check some of the health insurance-related plans with us and you can get the best one. It is good and important to buy a health insurance policy and we are always there to assist you regarding the same. Important Features to Consider: Age Lock Feature Unlimited Recharge 10X boost of un-used Sum Assured Higher Pre and Post Hospitalization Expenses Consumables Cover Health Check-up from 1st Year Cover BP and Diabetes from Day 1 No Co-Payments No Limits and Sub-Limits Best Service

Choosing the right type of life insurance policy is one of the most important requirements for a comfortable, hassle-free life. Not only does a life insurance policy guarantee that one’s dependents will be well looked after even if they are no longer around, but it can also contribute to building a substantial corpus to fulfill their future financial goals. Life insurance is an arrangement between the insurer which assures of compensation for loss of life in return for the payment of a pre-determined premium. There are different types of life insurance policies in India. One can choose a life insurance plan based on their unique individual requirements. Read this article to learn about different types of life insurance and their benefits. Tax Benefits Insurance plans benefits extend beyond just life cover, especially when it comes to the tax advantages they offer. There are quite a few tax benefits of having life insurance. The premiums paid for life insurance plan are eligible for tax deductions under Section 80(C) of the Income Tax Act, 1961. Tax benefits are according to your tax slab. However, this is not all. If one opts for health riders such as a critical illness cover along with their term plan, tax benefits under Section 80(D) of the Income Tax Act will apply to the rider premiums paid towards the rider. Additionally, the lumpsum sum assured paid out as a death benefit in a term insurance plan is exempted from taxes under Section 10(10D) of the Income Tax Act. This also applies to the sum assured paid out on the riders added to an insurance plan. All these are the tax advantages of an insurance plan. Different types of life insurance coverage are: Term Insurance Term insurance plan is the simplest form of insurance, which in case of a policy holder’s demise, ensures that the family gets the sum assured. It offers risk coverage for the duration of the policy term. The Sum Assured is paid to the beneficiary who is nominated by a policy holder. This is paid out as a lump-sum amount, or a combination of lump sum and monthly amount based on the plan chosen. In general term insurance cover should take care of your family living expenses in your absence after clearing all the debts / loans. Ideal way to invest the money coming out of term insurance is to invest in Annuity plan either immediate or deferred option depending on cash flow at the time of demise. Important riders: -> Double Accidental Death Benefits -> Income on Permanent Disability -> Critical Illness Cover, Waiver of premium. Payment options a) Regular Pay: Choose to pay till end of the term also called as Regular premium. b) Limited Pay: Choose to pay in single, premium, or limited premiums or till you turn 60 years of age. Example: if you are taking term insurance cover up to 75 years of age and your retirement age is 60 years, it is difficult to pay the premium after retirement, in these scenarios you can choose to pay using limited premium payment options. Whole Life Policy Whole life insurance is a type of life insurance that offers coverage right until the death of the policyholder. In this policy, you can opt for either a participating or non-participating policy, as per your financial needs and risk appetite. Though the premiums for participating whole life insurance are higher in comparison, dividends are paid out at regular intervals to the policyholders. The premium rates for a non-participating policy are lower, but the policyholder generally cannot avail the benefits of regular dividends. Endowment Policy Endowment policy is type of life insurance policy which acts as, both, an instrument for insurance and saving. These plans aim to provide maturity benefits to the life insured, in the form of a lump sum payment at the end of the policy tenure, even if a claim hasn’t been made. It is the most suitable types of life insurance for people looking to get maximum coverage alongside having a sizable savings component. They help the policyholder inculcate the habit of savings, even while providing financial security to their family. Money Back Policy Being one of the best types of life insurance policies, a money-back policy offers policyholders a percentage of the total sum assured at periodic intervals in the form of Survival Benefits. Once the policy reaches maturity, the remaining amount of the Sum Assured is handed over to the policyholder. However, if the policyholder dies while the term is ongoing, their dependents are given the entire Sum Assured without any deductions. Annuities and Pension In return for a lump sum, an insurance company gives you an annual income for the rest of your life. This is great if you live to a ripe old age and can take advantage of the income. Annuity plan either immediate or deferred option depending on cash flow at the time of investing. Annuity plans are the only products that provide lifetime guaranteed returns. Payouts either monthly, quarterly, half-yearly or yearly with or without Return of Purchase Plan. You can choose to have your spouse or kids as joint life to get the pension. After the demise of 1st annuitant, 2nd annuitant will start getting the pension. You can choose to give the initial invested money to 3rd person (nominee) after the demise of 2nd person. This is possible only if you choose Return of Purchase Plan option. Different companies have different entry age to invest in Annuity plan. Returns out of Annuity plans are taxable unless specified. ULIP Unit Linked Insurance Plan or ULIP is a type of life insurance product that offers dual benefits of investment and life insurance. Among the different types of life insurance policies available, ULIPs enjoy a high amount of popularity owing to their versatile nature. A portion of the premiums paid is directed towards ensuring insurance coverage, while the rest of the premium is invested into a bouquet of investment instruments, which can include market-backed equity funds, debt funds and other securities. ULIPs are extremely flexible instruments since investors can easily switch or redirect their premiums between the different funds available. They are also touted as having an edge over other market instruments in terms of tax-saving benefits, since their proceeds are exempted from LTCG (Long Term Capital Gains).

Careful planning can always help reach your financial goals. It may seem like hard, but doing so can prepare you for a more comfortable life when you decide to stop working and start enjoying your retirement. You may make change as needed but remember to stick to the plan so that you can achieve your milestones without delay and achieve your goals exactly you made them when you were younger. >Age plays a crucial role in financial planning. As soon as you start earning, you need to understand basics of financial planning. Identify short-term and long-term goals. Understand and identify priorities depending on age and life stage. There are many financial instruments in the Indian market. It is recommended to take the help of professional financial planners. Your 20s would be your first foray into the professional world, which means this is the time when you’ll start earning your own money. It’s also an excellent time to set your financial goals and decide on your approaches to accomplish those milestones. This may be exciting times since you’re earning your own money and you’d want to spend it on things you probably don’t need / exciting, while you keep aside some budget for your basic needs and adequate partying it is important to start saving on priority. You need to pay back your educational loans as soon as possible in case of any. Start building good credit history that helps you get home loan etc at best interest rates. When you save / invest in financial products it is important to understand insurance products are generally age based. For the same benefits, you will pay less when you are younger and gradually pay more as age grows. You need to understand the insurance needs for various goals like family security, kid’s higher education, kid’s yearly education and retirement. Generally, insurance products are needed for the goals that need to be secured even when you are not around for the family due to unforeseen events in life. In our view, once kids are born education must continue irrespective of bread winner is alive or not. At least basic education should be insured while you continue to invest in higher return investments for best possible education (like best B-Schools, Medicine, International education) for kids. Even for retirement, there are few suitable products that you can consider for some part of your retirement need and keep exploring and understanding on various ways to diversify your investments for retirement. In India marriages are considered grand event for life. Spend lot of money on clothing, ceremonies, food and hosting friends, relatives, and well-wishers. It is important to plan for marriage and honeymoon expenses instead of getting into debt trap by taking loans and using credit cards for these expenses. Try and spend within available budget and savings rather than taking loans and using credit cards. 30s are when things get serious and expensive life events happen. People get married, have kids, and buy a home. These significant milestones mean that even if your earnings grow, you may find it challenging to figure out how to save for retirement or avoid getting into debt. An excellent way to deal with this is as your salary increases, you figure out ways how to live below your means and save whatever extra you make from raises and bonuses. Remember, a home is one of the largest investments you’ll make in your lifetime and paying off a mortgage can reach up to 30 years. Raising children is another big investment that requires careful financial planning to be able to attend to their needs. Keep in mind that it gets more expensive as they grow older and when you start providing for their education. It is important to make sure, you have 6 months earnings / savings as emergency funds to be able to manage job risks / income loss / any unforeseen expenditure that come across. It is also important to make sure you keep aside your yearly commitments by saving them in low risk and high liquid debt instruments. Fixed Deposits / Recurring deposits are not ideal as the returns are considered as income attract higher taxes. Please talk to us how where to park these funds aside while they are available to liquidate any time and generate good returns. Now that you’ve started a family, some or even all may be dependent on your income, so it’s important to complete your life insurance policies and start creating a will. Getting life insurance in 30s if not 20s allows you to lock in a lower rate while you’re still young and healthy. Never leave your insurance needs to 40s. Once you reach 30, it’s time to increase your contributions for your retirement fund. If you started at 10% in your 20s, you could increase it to not less than 15% of your income. Middle age is when you’re more established in life, Income is at lifetime peaks and your finances should be able to reflect that. This will help you aim for more critical milestones in life. Hopefully, your debts are kept at the minimum. This includes car loans, credit card bills, home loans, and other consumer debt, which allows you to focus on other essential aspects, such as your kids’ college education. identify where to enrol them, so you have an idea on how much to spend on tuition. Another great goal to work on at this age is to have twice your annual income saved in your retirement accounts. You can augment this by finding other sources. You can do this by starting a small business or perhaps take on freelance projects that fit your skill. As soon as you enter 40s, it is important to make sure you have adequate and best health insurance plan. People generally expose themselves to health issues due to stressful work, responsibilities at home and social pressures. Taking health insurance while you are healthy helps avoiding loading and policy declines. You should make sure to diversify your investments into multiple financial instruments like Gold, Stocks, Mutual Funds, Bonds, Debentures, Retirement Plans, Real Estate and other structured products and alternative investments. Time flies fast. And when you’re close to the end of your professional life, it’s where everything starts to slow down, so take the necessary measures to max out your retirement contributions to help prepare you for retirement. Meet your financial advisor to help you figure out which options that work best for you. It would be ideal to pay off your mortgage to give you more financial freedom, which you should take advantage of for your retirement. By this time, it would be best to have saved around four to five times your annual salary for a more comfortable life as a retiree. Start to identify ways to earn your pension through various options like Systematic Withdrawal Plans, Annuity Plans, Guaranteed pension products, rental income, Provident Fund, Public Provident Fund and National Pension Scheme etc. Being a senior citizen is the time when all your savings and smart planning should be paying off. You can fine-tune your retirement goals according to your preferred lifestyle as you enjoy the rest of your days. You can consider downsizing your home or move to a smaller house to lessen your expenses. Finalize your will in case you wish to alter a few details. If needed, you can make other significant changes as you transition towards retirement. Review your life insurance policy to make sure everything is in place. Look into long-term care if you deemed it suitable for yourself and your spouse. Ideally, this should be in place before you need it. Conclusion All this may seem daunting, but you’ll have to step back and look at the bigger picture to help you put things into perspective. Keep in mind that there is no cookie cutter way to achieve success, so you don’t have to be discouraged if you passed these milestones. What you can do is take a moment to think about where you are and how your finances are doing, so you can make the necessary adjustments. The key is to always make deliberate choices when it comes to your finances. You should also be aware of these milestones, so you can never lose track of your financial goals up until you settle comfortably into retirement.

If you're feeling uncertain about your finances, you're not alone. Many people struggle with financial uncertainty at some point in their lives. Here are some reasons why you may be feeling uncertain about your finances: You're not sure how to create a budget that works for you. You're living paycheck to paycheck and don't have any savings. You're in debt and don't know how to pay it off. You're not making enough money to cover your expenses. You're going through a major life change such as a divorce or job loss. You're worried about retirement and if you'll have enough savings to live comfortably. You're not sure how to invest your money wisely. No matter what your financial situation is, there are steps you can take to improve it. Seeking advice from a financial professional or creating a plan to manage your money can help you gain more control over your finances and feel more confident about your financial future. Take a moment to consider these important questions for yourself: Does your current advisor? Align your current investments with your goals? Plan for emergency funding? Conduct a product comparison study? Provide any fixed / secure alternative earnings? Ever suggested products like NCD, MLD, Bonds etc? Do you know all the Financial Products? Do you know products beyond FDs, Insurance, Stocks, Mutual Funds and Real Estate? Do you know there are products that you can earn 8% without locking your funds? Do you know you can invest in Real Estate with minimum investment? Do you know how to plan for these important goals and life stages? How do you plan for children's higher education? How do you plan for annual education of children? How do you plan your child marriage? How do you plan for retirement? How do you protect your family in your absence? How to plan to buy a house or a car or to a foreign trip? Do you have these questions around stock market? Is the stock market always at risk? Is there a safer investment opportunity? Are F&O/derivatives suitable for me? Are there other options besides stocks and mutual funds? Do we need gold as an investment? Do you know the following about Life Insurance? Do you really need insurance? Which insurance products do you need(do not need)? How to determine time period and coverage? How to determine adequate cover? Do you know the following about Health Insurance? Difference between base & top-up plans? What is unlimited restoration of SA? Does your plan include cover consumables? Are there any limits, sub-limits in your policy? Difference between Corporate & Personal health insurance? Can I pay the premium of my entry age even if my age increases? Connect with our experts to get these questions answered for you.

#gold #goldinvestments #goldetf #sgb #goldmf #goldtaxation Since the beginning of recorded history, gold has been a universal symbol of wealth. Because of its beauty and scarcity, ancient civilizations coveted the precious metal as a manifestation of status and power. Ornaments, jewelry, and early forms of money were all crafted from gold. From the time of ancient civilizations to the modern era, gold has been the world’s currency of choice. Today, investors buy gold mainly as a hedge against political unrest and inflation because of gold’s low correlations with other asset classes. In addition, we recommend a portfolio allocation in commodities, including gold, to lower overall portfolio risk. Gold Bars / Coins This is perhaps the best-known form of direct gold ownership. Many people still believe in investing gold in the form of bars and coins is more safe and continue to invest in the traditional form of coins and bars. While heavy gold bars are an impressive sight, their large size makes them illiquid, and therefore costly to buy, store them in lockers safely and sell. After all, if you own one large gold bar as your entire holding in gold, and then decide to sell part of it, you can’t exactly chop off the end of the bar and sell it. If you buy them as smaller coins, you will end up paying premiums on the gold price. It used to be 5% but now it reached more or less 10%. Every time, you do the transaction 10% loss is a huge loss. The main problems with gold bullion are that the storage and insurance costs and the relatively large markup from the dealer both hinder profit potential. Gold ETFs / Mutual Funds A Gold ETF is an exchange-traded fund (ETF) that is equivalent to the domestic physical gold price. Gold ETFs are units representing physical gold which are in de-materialized form. One Gold ETF unit is equal to 10 mg of gold and is backed by physical gold of very high purity. Gold ETFs combine the flexibility of stock investment and the simplicity of gold investments. Gold ETFs are listed and traded on NSE & BSE like a stock of any company in cash segment. Gold ETF can be bought and sold very easily during trading hours. Buying Gold ETFs nothing but purchasing gold in an electronic form. When you actually redeem Gold ETF, you do not get physical gold, but receive the cash equivalent. Trading of gold ETFs takes place through DMAT and a broker, which makes it an extremely convenient way of electronically investing in gold. Because of its direct gold pricing, there is a complete transparency on the holdings of a Gold ETF. Please note there ETFs attract less fund management charges over Gold Mutual Funds. Who should invest in Gold ETFs? Gold ETFs are ideal for investors who wish to invest in gold but do not want to invest in physical gold due to the storage hassles / doubt about purity of gold and are also looking to get tax benefits. There is no premium or making charge, so investors stand to save money if their investment is substantial. What’s more, one can purchase as low as one unit (which is 10 milli grams). Investing in an ETF that is backed by physical gold, ETFs are best used as a tool to benefit from the price of gold rather than to get access to physical gold. So, when one liquidates Gold ETF Units, one is paid as per domestic market price of the gold. AMCs also permit redemption of Gold ETF Units in the form of physical gold in ‘Creation Unit’ size, if one holds equivalent of 1kg of gold in ETFs, or in multiples thereof. A tax efficient way to hold gold as the income earned from them is treated as long term capital gain. ETFs are accepted as collateral for loans. How to buy and sell Gold ETFs? Gold ETFs can be bought or sold at the stock exchange through the broker using a DMAT account and trading account. Since one is investing in an ETF that is backed by physical gold, ETFs are best used as a tool to benefit from the price of gold rather than to get access to physical gold. So, when one liquidates Gold ETF Units, one is paid as per domestic market price of the gold. AMCs also permit redemption of Gold ETF Units in the form of physical gold in ‘Creation Unit’ size, if one holds equivalent of 1kg of gold in ETFs, or in multiples thereof. Gold Bonds Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are substitutes for holding physical gold. It is one of the preferred investment options for investors looking for secure investment. SGBs are issued in multiples of one gram of gold where the investors can easily invest in their DMAT account. Unlike physical gold which is an idle investment, 2.5% interest can be earned on sovereign gold bonds on semi-annual basis. Sovereign gold bond scheme can helps in portfolio diversification. Tax Benefits The taxation for Sovereign Gold Bonds is upon interest applicable as per the provisions of the Income Tax Act, 1961. In the context of SGB redemption, the capital gains tax levied on an individual is exempted. Also, long-term capital gains attract indexation benefits to an investor or when the bond is transferred from one person to another. Investment Limits An individual investor(trust) can buy 4 kg (20kg) of gold every year as the ceiling has been fixed on a fiscal year (April-March) basis. The sovereign gold bond price varies depending on different factors. Tenure SGBs have a maturity period of 8 years. However, the investor can exit the bond from the 5th year (only on the date of interest pay-out). The amount of investment also depends on the current sovereign gold bond price. It is a good strategy to buy SGBs if you are planning as long term investment option. How to choose among the available options? As we have seen, there are multiple ways to invest in gold like ETFs, SGBs, Coins / Bars, Ornaments. Investing for long term / Investing for kids marriage etc? Gold has an important role to play in Indian marriages. People buy large quantities of gold during marriages. So most people tend to accumulate ornaments or coins for kids marriages. If you buy latest design ornaments of current times, by the time your kid grows those could become old. You will end up melting the gold and buying new ornaments where you incur losses. Instead, SGBs are good alternatives for this purpose. Where you can invest in gold for long term, continue to earn interest and the returns are tax free. Investing for liquidation / to avoid stock market risks? It is a good strategy to invest certain percentage of your equity investment into gold as it helps to liquidate during recession or wars or pandemic like COVID 19 etc. More over, gold prices would raise in these situations while the stock markets go down. Gold ETFs are the best instruments to invest for this purpose. What is the best way to buy gold ornaments? In India, there are two ways to invest in gold ornaments: You can just walk-in to the shops and identify the good model and make the payment and walk away with the ornament. Generally this approach attracts additional making and wasting charges generally starts around 18% to 30% depending on the models. The other approach is, you can identify the shop that offers best models and join the gold savings schemes. Generally, gold accumulated by investing in this scheme will not attract making charges (unlimited / up to certain percentage). But most cases, the gold accumulated is very less compared to the item that you actually want to buy or you end up taking smaller items limiting within accumulated gold. Best way to buy ornaments is the mix of both Gold ETFs and gold savings schemes. First of all, you need to identify the target ornament that you would like to buy and an average weight of the ornament. Example you would like to buy necklace of weight 100 grams. You need to start accumulating the gold ETFs in your DMAT up to 100 grams. Once you have equivalent weight is accumulated, join the gold savings scheme. In this scheme, monthly investment should be roughly equivalent to 9 grams in a 11 months scheme. You can sell the Gold ETFs equivalent to 9 grams and pay in the scheme every month. You can get into higher monthly commitments without any fear as the equivalent gold is already accumulated. Now the 100 grams necklace can be purchased without any making charges. You can get into higher monthly commitments without any fear as the equivalent gold is already accumulated. Now the 100 grams necklace can be purchased without any making charges. 18% to 30% savings by investing over a period of one year is a huge savings. Conclusion Gold Mutual Funds, Gold ETFs and SGBs are three simple and better ways to invest in gold in digital form. Depending on your individual needs and investment horizon, you can select the best investment option. Investing in gold through SIP in Gold Mutual Funds without worrying about maturity period is very convenient option.