Let’s look at the two main ways to purchase Gold in India:

1) Physical gold via jewelry or coins

2) Gold mutual funds or ETFs

Why bother about the form of Gold you purchase?

If the purpose is consumption, for e.g., a wedding, you should buy gold physically.

But if you are looking to accumulate gold for instance for the marriage of your children or for investment purposes, you should consider buying gold ETFs.

Buying gold is a hassle

You have to check numerous things before buying gold jewelry or gold coins such as hallmark certificates for purity and physically look for an choose the right piece which suits your needs. There is then a 20%-30% making charge involved. In comparison buying gold via an ETF is as simple as buying any other mutual fund. You can even buy just 1 unit of gold whereas even the smallest piece of jewelry weighs a minimum of 4 grams.

Gold ETFs are economical and easily liquefiable

The only cost investors have to consider when buying gold ETFs is a minimal fund management fee of around 1%. ETFs can be easily sold back at prevailing market rates. In comparison, when selling physical gold in the market you stand to lose up to 25-30% of your initial investment as making charges are discounted for and typically jewelers buy back gold at 2-3% below prevailing market rates.

Tax benefits

After an ownership period of 3 years, physical gold attracts wealth tax and VAT, neither of which happens when you own ETFs.

Storage is expensive

Buyers need to find safe physical storage such as bank lockers to store their gold and this may prove expensive. But for Gold ETF, storage is taken care of by the fund. Investors hold the gold ETFs in a demat account, and don’t need to bother about its security as in the case of physical gold.

Quality Assurance of Gold ETFs

Gold ETFs are backed by gold of 99.5% purity, so investors can be assured about the quality of gold.

Do not be misled into purchasing the wrong form of Gold. Do consider your investment purpose carefully before heading out to purchase the shining metal.

One of the easiest ways to begin your journey as an investor today is to invest in a mutual fund. The concept of a Mutual fund is simple.

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One of the easiest ways to begin your journey as an investor today is to invest in a mutual fund. The concept of a Mutual fund is simple.

Money obtained from investors is pooled together. Investors may be individuals or companies.

A fund manager manages this pool of money and invests the cash on behalf of the investors. His goal varies depending on the type of fund he manages.

For example, a fixed-income fund manager seeks the highest yield at the lowest risk for his investors.

How you can benefit from Mutual Funds

A key reason for investing in mutual funds is that it’s simple and convenient.

But that’s not just it.

The industry is also tightly regulated in comparison to our friends in the banking and insurance sectors. In recent times, investing in Mutual Funds is being considered relatively as a safer and more lucrative option to certain financial instruments.

In addition, your investment will be managed as part of a pool by a professional fund manager who constantly monitors the stocks and bonds in the fund’s portfolio. We can certainly accept that a fund manager can devote considerably more time to selecting investments than an individual investor.

This is a very convenient option as you will be able to invest in an informed manner without having to stress over analyzing financial statements of companies and picking a stock yourselves.

So here’s our quick roundup on Why should you invest in Mutual Funds?

Low Minimum Investment: Start your investment from as low as Rs. 500/- in SIP (Systematic Investment Plan) or Rs. 5000/- in lump sum.
Liquidity: Unlike bank fixed deposits, mutual funds have a flexible withdrawal process, which makes availability of money possible easily. Investor can redeem their units at any point in time.
Professionally Managed: Once you invest through Mutual Funds, you can relax that an expert will make desired changes to scheme portfolio wherein you have invested.
Diversification: You can invest across different asset classes like equity, debt and gold allowing you to diversify your investments and protect it from inflation, recessions and any other market uncertainties.
You can achieve you goals, be it long-term, short-term, tax saving or your emergency needs.

Achieve Financial Goals: A Systematic Investment Plan (SIP) will help you make the most of the compounding effect. You can find a suitable scheme for all your different financial goals such as wealth creation, child’s marriage or retirement.

Transparency: The Mutual fund industry is regulated by The Securities and Exchange Board of India (SEBI). SEBI has defined comprehensive processes, rules and regulations in order to protect the interest of investors and ensure transparency. It is mandatory for all Asset Management Companies (AMCs) to follow these processes and to disclose their scheme portfolios every month to maintain utmost transparency.

Mutual Funds are of many kinds and it’s easy to get lost even for an experienced investor amongst the wide array of funds available to you in the market.

To enable our investors to pick the best mutual fund to achieve their financial freedom, let’s understand in details, the ways in which mutual funds are classified.

Mutual funds can be classified on the basis of investment objective or on the basis of maturity period.

Closed vs. Open-Ended Funds

Open ended Funds

Subscription: Open ended Funds offer units for sale without specifying any duration for redemption.
Selling price: Redemption value is on the basis of the ongoing NAV
Maturity: Doesn’t have a set number of shares or maturity period
How is it traded: Not traded on the open market (like stocks), NAV of such schemes is generally less fluctuating
Liquidity: Can be redeemed anytime
Closed-ended funds

Subscription: Subscription opens at the time of New Fund Offer (NFO) and for a defined period only.
Selling Price: Price varies depending on supply and demand
Maturity: Set number of shares and a fixed maturity period.
How is it traded: Listed on a recognised stock exchange. They can be traded at any time of the day when the market is open
Liquidity: Fixed lock-in time period, however can be bought and sold on a recognized stock exchange where they are listed.
Mutual fund can be categorized as per asset classes. Broadly, they can be classified under the following seven broad categories:

Equity Mutual Fund
Debt Mutual Fund
Gold Mutual Fund
Multi Asset Fund
Hybrid Mutual Fund
Solution Oriented Schemes and
Other Mutual Fund
Knowing which fund is right for you is essential to making confident investment decisions to grow your wealth in a sustained manner.

This financial emergency could be in the form of

Medical expenses
A job loss
Repair work to your home or car
Unexpected travel expenses
or any other tough time.
2020 taught us the importance of saving for uncertainties, when unemployment rose and people started redeeming from their investments and increasing their debts. Having an emergency fund keeps you away from tapping into mutual funds reserved for long term goals.

How much to save

It is recommended that you need to have enough money at your disposal that can keep up with your consumption pattern for ideally 12 months. If your monthly expenses are Rs 50,000 then your emergency fund should save 50,000×12 = Rs.6,00,000 for your emergency fund.

However, the size of your emergency fund will vary depending on your lifestyle, monthly expenses, income, and financial dependents. Those who have EMIs or higher monthly expenses might need to start building a larger emergency corpus. If you have no financial obligations or if you are young, you can reduce your weightage to six months’ worth of expenses.

Where to invest

Follow the SLR (safety, liquidity, and return) philosophy while building this corpus. Consider financial instruments that prioritizes safety and liquidity of your money over returns. Consider bank deposits and liquid funds (with a short duration of 3 months) for building your emergency corpus. Those who are beginning to save can start with one month and then gradually build it up from there. As per SEBI norms, liquid funds invest in debt and money market securities with maturity of up to 91 days. The invested money is parked in market instruments such as Certificate of Deposits, Commercial Papers, Term Deposits, Call Money, Treasury Bills, and so on.

Things to consider when building your emergency corpus

Liquidity: Liquidity refers to how quickly your investments can be converted to cash. Invest in instruments that does not attract high penalties or exit loads.

Safety: Avoid saving in instruments that have high risk for capital erosion, instead, prioritize safety over returns.
Co-relation with other asset classes: Your investment portfolio has several asset classes, it’s important to evaluate how your emergency fund fits in with the rest of your portfolio.
Risk appetite: If you are conservative and have a low threshold for risk, you might want to consider a higher sum dedicated to your emergency fund.

Investing in ESG Funds are considered to be ‘sustainable’ investing. They are essentially schemes that invest into companies that rank high on environment, social and good governance practices.

ESG schemes gained popularity since 2018 in India. While there are many ESG funds in the market, the Quantum India ESG Equity Fund is one such fund that was the frontrunner in the market. Since then, several players have entered the market. As per AMFI data in December, 2020, the combined assets under management of existing ESG funds in India are at Rs. 9,516 crores.

Socially Responsible Investing (SRI), was the predecessor to ESG mutual fund. Investors are beginning to recognize the importance of weighing both financial and non-financial metrics while making investment decisions. They well understand that lack of foresight on risk and responsibility management eventually translates into lower profitability and valuation. ESG investing aims to achieve the triple bottom line that is good for the people, planet and profits. ESG investing allows investors to express their own values and to ensure that their savings and investments reflect their preferences, without compromising on returns.

Mutual funds that incorporate ESG screening criteria in their equity selection prove to be better long-term custodians of investors capital, provide downside protection, and generate better long-term risk-adjusted returns for your clients.

it is important to evaluate where the companies that the equity scheme invests in faces the risk on account of ESG parameters, as ignoring these risks can have far-reaching consequences.

One might argue that responsible investing is just a passing trend. But a closer look at how the trend has gained momentum over the past 15 years suggests otherwise.

How to invest in ESG Equity Mutual Fund

While ESG equity investments should be on your investment portfolio, it’s best to invest in equities in a staggered manner to counter uncertainty and average out the cost of buying.

This is where systematic investment plans (SIPs) in mutual funds can help you make a disciplined investment route of investing in mutual funds.