The right investment

Diwali is about happiness, togetherness, smiles and positivity. While Diwali means cleaning up your home, buying new clothes, worshipping Goddess Lakshmi and Lord Ganesha, on Dhanteras (which is being celebrated today), people buy gold, silver, diamond, home appliances, new furniture and even invest in fixed deposit, mutual funds and so on. Traditionally, it was primarily the yellow metal that people purchased on Dhanteras, today more and more people are exploring different types of investment. 

Brijesh Parnami, CEO and executive director,  Essel Wealth Services, says that there are various investment options like stocks, mutual funds, bonds and more traditional variants like FDs, recurring deposits and, most importantly, gold at least during this time of the year, available in the market. 
“We generally don’t advice anyone to invest in gold but this metal is associated with the sentimental values and beliefs of people since it is considered auspicious. We recommend people to invest in digital gold instead, as it is the best substitute to buying physical gold. The investment made would be totally in the metal itself and not on the other aspects associated with purchasing physical gold like making charge, tax on making charges, among others,” says Parnami, adding that with digital or e-gold, you get other benefits like security and flexibility of transaction. This makes it more desirable than physical gold.
 
Several finance experts insist that mutual funds is one of the best options to invest in. Sanjiv Singhal, founder and COO at Scripbox, says, “Whether it’s Dhanteras or your birthday, it doesn’t matter when you are investing, it should always fit in your plan for your future. Mutual funds are the best option for creating long term and inflation-beating wealth.  Invest with a purpose; identify what you are investing for, how much you will need and by when do you aim to realise the goal. This will help you in making the right investment decisions.”

Agreeing to Singhal, Parnami, says that he always recommends people to invest in mutual funds. “It is the best investment option throughout the year. It also provides completely bespoke portfolio for individuals and professional expertise. It can either be investment in equity, debt or hybrid fund and the payment mode can either be Systematic Investment Plan  (SIP)  or lump sum, depending on personal limitations and preferences of investors,” he advises. 

Parnami further suggests that since people save money throughout the year to invest in gold during these festivities, people should explore new avenues like e-gold. “If gold is the only thing one needs to buy to make Dhanteras auspicious, then there is no better investment horizon then e-gold as it eliminates all the unnecessary cost associated with physical gold. But then it is advisable to look into other investment options that are likely to provide better returns for those who want to invest their Diwali bonus or yearly savings. The conservative portfolio of mutual fund would provide better returns than gold or e-gold,” he adds.  

Singhal asserts that  it is not wise to purchase gold jewellery as an investment; you must look at it for immediate use only. “Investments, by definition, are something you will one day sell for meeting your expenses. Personal gold jewellery usually does not meet that criteria,” he quips.
  
C S Sudheer, CEO and founder of IndianMoney.com, says that while buying physical gold, you can enjoy the touch and feel of the metal and there’s a status symbol factor associated with it. “Gold comes in handy during the marriage of your children. Gold bars and gold coins can be used for gifting. You can also avail a gold loan by pledging gold coins/ jewellery. You don’t need a demat account to buy gold. However, there are a lot of risks associated when you buy physical gold. Firstly, there’s the risk of theft if kept at home and you have to pay bank locker charges if kept at the bank. Purity may be a problem, so opt for Hallmark certified gold and check the Hallmark stamp of the Bureau of Indian Standards (BIS). You might have to pay a premium over market rates when making a purchase, and you get a lower rate than the prevailing market rate, if you sell. Also, gold prices vary across jewellers. There’s no uniformity in prices. Liquidity (ease of buying/ selling) is low vis-à-vis gold ETFs, which are traded on exchanges,” quips Sudheer.

While making an investment during Dhanteras, keep these few things in mind  

• Last Dhanteras the price of gold was Rs 30,000 for 10 gm. Gold is now around Rs 33,400. If your craze for gold cannot be satiated and you will make a purchase, no matter the price, do follow these steps: 
• Always buy gold from reputed jewellers and check prices before making a purchase. 
• Gold ornaments have making charges which can be as high as 25 per cent of the cost of gold. Opt for jewellers who offer fixed making charges on buying gold ornaments in bulk. 
• Check if gold has been Hallmarked by BIS (Bureau of Indian Standards). This is done at recognised Assaying and Hallmarking centres. 
• Gold which is of 24 carats is 99.9 per cent pure. Check the purity of gold before making a purchase.
• When buying gold jewellery, check the bill which shows the value of gold and the precious stones. Take a close look at the making charges.
• Check the jeweller’s exchange policy. This comes in handy in case of an exchange. 
• If gold is for investment, buy gold coins at banks.
• Check for insurance on high-end jewelry. Many jewellers offer insurance on gold jewellery purchases above Rs 50,000. 
• If you are buying gold online, look at trusted sites and organised retailers. 
• If you are buying gold this Danteras, look at purity, BIS Hallmark, making charges, exchange and buy-backs. Do consider Gold ETFs which are an excellent way of investing in gold. There are no storage costs and units can be sold if you need gold for social occasions.

Tips by CS Sudheer