Should you invest in Gold Funds in India

Physical gold such as gold jewelry or gold coins has several drawbacks such as storage in safety vaults and the associated locker charges. They also demand price markups due to the design and making charges. Apart from these, purity issues and lack of flexibility in investment amounts can make buying physical gold inefficient. In contrast, Gold ETFs and Gold Fund of Funds have become popular forms of investment. Gold ETFs have received rising net inflows from investors. The number of folios in Gold ETF surged by almost 10% in June to Rs. 18.32 lakh from Rs. 16.68 lakh in May as per monthly data from AMFI. Another way of investing in Gold digitally and overcoming the drawbacks of investing in physical gold is by investing in gold fund of funds instead.

The meaning of Gold Fund of Funds is an open-ended fund which has an underlying investment in Gold ETFs, that in turn is backed by physical gold and tracks the domestic price of Gold. The NAV is declared at the end of the trading day similar to other mutual funds. One can invest in a Gold Fund of Funds via an SIP, where you can invest a minimum of Rs 500. When comparing gold funds vs gold ETF, one doesn’t need a DEMAT account for investing in a gold fund of funds. The capital gain arising out of redeeming Gold Funds within less than three years is subject to short-term capital gains tax which will be taxed as per Income Tax slabs. For capital gains arising for a holding period of more than three years, then it will be long-term capital gain, which will be taxed at the rate of 20%.

Gold acts as a strategic asset in an investor’s portfolio, given its ability to be an effective risk-reducing portfolio diversifier. It helped alleviate losses for investors who owned them during the pandemic.

With the fall in gold prices in response to the strengthening of the US dollar in Jun 2021 and talks of interest rate tightening as early as CY 2023, investors can consider allocating a portion of their portfolio to Gold.

While selecting a Gold fund of Funds, just like any mutual fund, investors need to analyze the fund based on certain quantitative and qualitative parameters, that one can use to arrive at the best gold funds as per their requirements. Additionally, it would be best if one were to keep their financial goals, risk appetite and investment horizon in mind.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Opening The Negotiation

Many people stumble at the opening of their negotiation. This can set the stage for a less than optimum outcome. Here are just a few points I find helpful to keep in mind when I start a negotiation.

1. Don’t set your initial offer near your final objective. Give yourself room to negotiate. It doesn’t matter what you are negotiating – hours on a project, scope-of-work, specifications, price, who’s going to do what, etc. When you start any negotiation you must assume the other party will always put their maximum positions on the table first. Equally important is the fact that they probably will not disclose to you the minimum they are willing to accept. Don’t be shy about asking for everything you might want and more-use this as your starting point.

2. Give yourself enough time to negotiate. Before you start make sure you have allowed a realistic amount of time for the negotiation process to take place. Hours, weeks or months-it will frequently take longer than you expect. Rushing through the negotiation almost always works against you.

3. Don’t assume you know what the other party wants. It is far more prudent to assume that you do not know and then proceed to discover the realities of the situation by patient testing and questioning. If you proceed to negotiate a deal on the basis of your own untested estimate, you are making serious mistake.

4. Do not assume that your aspiration level is high enough. It is possible that your demands are too modest, or too easy to achieve. The other party may not know what they want or may have a set of values quite different from your own.

5. Finally, never accept the first offer. Many people do if the offer is as good as they expected or hoped to get. There are two good reasons not to accept: First, the other party is probably willing to make some concessions. Second, if you take the first offer, the other party is often left with the feeling that they were foolish for starting too low. In any case, the negotiator who takes the first offer too fast makes a mistake.

Living the 10/80/10 Rule for Past/Present/Future Awareness

One of the great things about journals or taking regular snapshots (not just selfies) is that when you look back, you realize how quickly time really does fly. I decided to clean my office recently and while I was moving some papers, my old student card from the University of British Columbia, hit the floor and I quickly realized how much time has passed. My youthful appearance in 1992 has transitioned into a present day portrait that reflects the passing of a significant amount of time. I can still remember sitting in dank libraries studying, late into the night thinking how the time seemed stagnant and interminable. Once and a while I would daydream about what my life would be like when I was done university and then all of a sudden “poof” a few years fly by. My Dad used to (and still does) remind me to be careful about wishing or dreaming my life away because time has a curious was of speeding up if you are not paying attention to the present moment.

I recently read a story about a family who decided that life was going by too quickly and they wanted to step off the “treadmill” and really live their lives fully and presently. They quit their jobs, sold everything and decided that they were, along with their young children, going to buy bicycles and ride them from Alaska to Argentina. They completed the trek in just over three years. Working in healthcare for many years, I was reminded on an almost daily basis about the importance of living a full and rich life. When people realize that the end is near, more often than not they talk about wishing they took more chances and lived in the moment rather than worrying about the future or regretting the past.

It is easy to say but hard to do: live in the present moment. We of course have to spend some time planning and dreaming about what we want our lives to be but we must spend the majority of time living in the present and making it happen. By being in the present moment, time really does change its rate. If you were to force yourself to pay attention to the seconds, you would find that the days seem longer. The key is to pay attention to the seconds while doing something that is mundane. Really try to make those moments last and be present in them. We all have mundane things we have to do like brush our teeth, shovel the driveway, cut the grass, and pay the bills. These moments, which are usually neutral in terms of emotional attachment, can be used as moments for practicing present moment awareness and slowing life down. Being mindful is not just about slowing things down but it literally improves our health. Research has shown that when people are taught to practice mindfulness for just thirty minutes a day for eight weeks, their brain literally changes. The brain grows in the area responsible for feelings of happiness and shrinks in areas which cause feelings of fear, rage, and anxiety.

If we accept that the present moment is the only moment you can affect, then it is here where we should spend the majority of our time. I have met clients who have told me that bad things are always just happening to them. When I listen to their history, it is hard to argue that their lives sound like a series of unfortunate events. I believe that in many cases by living in the future or the past too long, our hand is no longer on the “tiller of our boat” and we are at the mercy of the winds to blow us any which way. Their is not much point to living in the past as that part of time cannot be affected and the future is only imaginary so there is no point in being there too long either. I tell my clients to try and live the 10/80/10 rule for past/present/future. There is certainly some value in reflecting on the past. The past can be a good teacher and it can also be a reminder of how far you have come on your journey. Looking at the old snapshots can be useful if they are creating happy feelings. The future can be useful to set a course and a plan with the knowledge that you really cannot know how it will all work out but implementing the plan in the present gives you a better chance of reaching the goal. Spend a bit of time dreaming and planning but the majority of the time is spent right here at this moment.

Most often clients will say to me that they find just sitting and being mindful to be unproductive. They also tell me that they cannot find the time to do this for five minutes a day. I remind them that mindfulness does not have to be done sitting. It can be done when you brush your teeth but if you are brushing your teeth and thinking about what you will do next, it is not mindful and it is not present moment awareness. This practice of mindfulness done as often as you can and must be thought of as the most productive thing you can do in a day. I use the analogy of a needle on a record player. Our subconscious mind is continuing to play the same record over and over. There is no chance for growth or change if you are hearing the same thing day in and day out. Instead of music, our subconscious minds are playing tracks which are well worn grooves of our fears, insecurities, and beliefs. If you want real change, lift the needle off the record for a few minutes everyday. Quiet your mind so that new tracks can be laid.

Try the 10/80/10 rule and see how much of your time was probably spent in past or future. When I look at the old picture of me from 1992, I see a young man who lived too much of his life in the future. I don’t look at the picture with regret but rather I see how far I have come and I can celebrate the progress… but not for too long. Time to get back to making life actually happen. Time to go mindfully shovel my driveway.

Brett