INSUBCONTINENT EXCLUSIVE:
Gold investment should be considered only from diversification perspective, say experts.With the wedding season in full swing, consumers are
Buying gold is not only considered auspicious but is also believed to bring financial security
Even as historically gold prices perk up during the wedding season, prices of the yellow metal have remained flat to negative in recent
months on account of easing of volatility in equity and debt market
Analysts advise that 10-15 per cent of your portfolio should be invested in gold depending upon your age
So should you invest in gold now or notHere are the key aspects that you should note while making investments in gold:Gold provides
diversification benefitGold is unlikely to be an attractive investment when the equity and the debt markets are in fine conditions, said
Raghvendra Nath (CFA), MD, Ladderup Wealth Management.Dinesh Rohira, CEO and Founder at 5nance.com seconds Mr Nath."Seeing the current
volatility in the equity market, it is a good time to invest in gold as it provides good hedging on account
A weak global sentiment, especially in the US market, is expected to have a cascading effect on emerging markets.This makes gold investment
an ideal asset class to diversify portfolio," he said.How much gold should you have in the investment portfolioGold investment should be
major factors: one's goal and risk appetite
People above this age bracket should invest 10 per cent- 15 per cent in gold," said Brijesh Parnami, Executive Director and CEO, Essel
Finance Wealth Services.In fact, experts warn that gold investments can even provide negative returns."Gold is infamous for spending long
periods of time doing nothing and sometimes even gives negative returns when equity markets are doing very well
The yellow metal has the ability to provide refuge at a time when there is pandemonium
So, a moderate exposure in gold is optimal," said Anil Rego, Founder and CEO, Right Horizons.Physical, e-gold or paper goldThere are several
gold investment options available in the market
The traditional gold investment mode is purchasing of physical gold
However, analysts suggest going for electronic gold."With physical gold, people generally have to pay for associated charges as well like
the Goods and Services Tax (GST)
Hence, compared to physical gold, electronic gold or e-gold is a better option
to invest their funds into gold in smaller denomination and hold it in demat form.Gold schemes backed by government can also be
considered."One can even invest in government-launched schemes like Gold Monetization Scheme, Gold Sovereign Bond Scheme and the Indian Gold
These schemes provide an extra earning option for investors in the form of interest," added Mr Nambiath."Such bonds help in earning an
annual interest of 2.5 per cent, in addition to getting their market price at the time of sale
Plus, there is no cost involved for its storage, and investors are not charged any sort of capital gains tax on holding the bond till
types of assets.Gold exchange-traded funds (ETF) are ideal for investors who do not like the hassles and costs of storing and safeguarding
investor can easily encash his holding by selling his units on the stock exchange
Thus the fund offers an ideal way to invest in gold
The value is stored electronically and also provides safety
Further, it can be invested partially with as low as Rs 1,000 a month," explained Mr Nambiath.Tax implications of investing in gold and
gold-based instrumentsThe tax levied on gold depends on the form of gold one invests in
purchasing physical gold, three per cent GST is charged
Eight per cent GST is applicable as the making charge
While selling the asset, if it is sold within three years of purchase, then short-term capital gains (STCG) tax is levied and long-term
capital gains (LTCG) tax is charged if gold is sold after three years of purchase," said Mr Parnami
STCG and LTCG taxes differ according to the time for which an asset is held by the investor.For taxation purposes, gold ETFs and mutual
funds are treated similar to non-equity or debt mutual funds and they come under the purview of capital gains taxation rules."For short-term
investment period of 36 months or lower), the tax applicable is as per the tax bracket of an individual
Gold ETF and e-gold attract the same tax rate as that of physical gold at the time of redemption," Vijay Kuppa, Co-Founder, Orowealth,
said."Sovereign gold bonds earn interest for the buyer which is taxable and if one transfers it within its five-year lock-in period, then
capital gains are taxed and at maturity, it is tax free," he said.For long-term capital gains, the tax applicable is 20 per cent for indexed
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