Hi April, I am not against people investing in gold. It is a good investment but its long term returns will only just beat inflation. So, it can be a part of your total asset allocation but if some one is young they need to invest in equities as it will give better returns over a long term. Stock market is not risky if you think about this investment in the same way as you think about gold. For example, if the gold prices crash to 15000 tomorrow people will go and buy more gold but if the stock market crashes to 14000 tomorrow people will panic and sell their holdings. You must have bought the coin 3 years back and yes the value is double now. This is a normal phenomenon that whenever equity markets are not doing well people rush to safer horizons like bullion and the price of gold and silver go up. If the gold coin you have is an investment, do you plan to book profits or stay invested? Or will you exchange this coin for gold jewelry when required? If you invest in gold also the value of the investment can come down below you purchase price that effectively means that you have lost a part of your principal but did not book the loss. I say that the stock market only appreciates in the long term and give better returns than most of the other asset classes. One of my client invest 4000 rupees in 1994 in HDFC Bank shares today the value is 400000 that’s an absolute return of 10,000 % in just 16 years. If I were to compare the returns from gold and equities over last 10 years, gold had given an absolute return of 343% but the funds which I keep suggesting in this forum has given 750-1000% absolute returns. This is more than double and keeping in mind that the stock market crashed two times in last 10 years including the big fall from 21600 to 7800. So, gold is a good investment but it shouldn’t be more than 10% of you asset allocation i.e. if your portfolio size is 10 Lakh you should have not more than 1 lakh in gold and that too in gold ETFs Kind Regards, Shaishav
Thanks for the sound advice First of all I want to ask u is what are equities? Secondly why do they say that mutual fund investments are subject to market risk? if it depends on stock market how can it be safe? Also I am Investing in gold not to buy gold ornaments but to sell them in time of need and I am sure I will get more than the purchase price at any point of time bcoz as far as I have seen gold has never depreciated only appreciates. And I have invested in solid gold coin , not in gold ETF's Any advice on the above is welcome Thanks
Though I have remained a viewer of this thread, I would like to congratulate you for wonderfully educating all of us regarding investments. I have got answers for many of my queries from here.
Hi April, Equity refers to the value ownership of a property, company, business etc. So, if you buy reliance shares for 1 lakh you will be owner of reliance to that extent. Yes, mutual funds are subject to market risks as different schemes invest in different markets like stock market, debt market etc. Any kind of market where trading happens is subject to risk. For example the 100 rupee note in you purse is subject to inflation and currency risk. The money in your savings account or FD is subject to interest risk. The gold in your locker is subject to risks in bullion market. The shares in you demat account is subject to stock market risks. The degree of risk will defer according to the return you can get from these investments. So for shares the risk is high and for FD the risk is low. Stock market is safe if you stay invested for a long term as stock market will go up only. Those who stay invested for long term always make money and get better returns than most of the asset classes. Gold also depreciates and also the prices will not move up abnormally. So a person who bought gold at 19000 must be currently sitting on a loss but in the long term it will also go up. I don't know where else you invest other than gold. If you invest only in gold I guess you will have to buy and keep gold worth more than crores so that it can take care of your retirement and kids education etc. The cost of keeping it safe will be very high. I guess here the discussion is not about where to invest but more on the belief of an individual. I believe that stock market is the best investment but you have to chose the right medium to get into it. You believe that gold is better as it gives good returns and the money is also safe. Both of us are correct as per our beliefs. I think you can look at investing in gold ETFs as it is the smartest way of investing in gold. Kind Regards, Shaishav
Hi Ubellah, Thank you for your kind words. If you have any specific query I would be glad to help you out with it. Regards, Shaishav
Hi shaishav, Thanks for your suggestions.You do have a wonderful knowledge regarding all these things. Also Gold is one of my investments. I am 29 yrs and my DH is 37.He is businessman, So his monthly returns are not fixed , also sometimes he suffers losses. I am a housewife with a 5 yr old daughter.Since my DH does not tell me regarding his business transactions , I don't know how much money he makes , also sometimes he has to suffer bad debts also. We have 3 LIC policies. 1 in my name, one in DH name and one in DD name. Also I have invested 38000 one time paid up amt LIC policy in the name of DD for 15 yrs.Also I have one ULIP LIC policy AL LIC policies are for a period of 10- 15 yrs.all are yearly premiums Also we have HDFC standard life ins for which I have to pay 1000rs every month which is due in 2015.we have bajaj allianz due in 2015. also one AIG policy in name of DD due in 2015 and thereafter she will get a lumsum amt for the rest of her life till she is alive. we have mediclaim insurance for all three as well as personal accident cover policy for DH. apart from this do we have to make any investments for DD or for our retirement . I need to know that. Also every year our premium amounts to 250000 which is putting a burden on us.most of the times my husband ends up paying LIC policies after due date , because of which we have to pay penalty. my DH has no cash in bank as all his money that he earns goes into employees salary or into business.He has given 2 business units on rent from which he gets some amt.But most of that also goes in to business. waiting for your reply.
Shaishav I have a doubt. The other day I was reading some news aobut some MFs in India where there was fraud etc, I wanted to know how safe are the MFs ? How can Investors protect themselves from such frauds? If there was a fraud, would the Investor be able to still gain whatever % of returns were supposed to be given or atleast will the principal be safe? Could you please clarify on these Thanks Sri
Hi Sri, I guess you are talking about the insider information trade in HDFC mutual fund. It wasn't a fraud. A fraud is what Mr. Madoff did where his asset management arm was all fluke and was also declared one of the biggest ponzi schemes. This was an incident where the equity dealer of HDFC mutual fund gave information to two of his friends about the stocks which HDFC MF was going to buy. His friends actually bought the shares of that company before HDFC mutual fund. After HDFC MF bought the shares the share price shot up and these two guys made huge profits (one made 1 crore plus the other made 90 lakh). Here, HDFC MF wasn't at fault at all. Now about how safe mutual funds are in India. SEBI keeps a very close eye on the stock market trading and can easily detect any type of manipulation in markets. Even if I do some simple trading like "synchronized trading" SEBI can detect that and will ban me for atleast 3-5 years from trading in the market. Be assured that Indian markets are safe and has a very able regulator in SEBI. Kind Regards, Shaishav
Thanks Shaishav for the above clarification! I am closely following all your suggestions to our friends here. Your contribution to this forum is very valuable and please keep doing the great job you are doing!:cheers
