ELSS – Triple benefit – 80C Tax exemption upto Rs.150000, Tax free dividends , & Tax free Returns

Tax Planning made easier Mutual Funds offer you a simple way to get tax benefits. ELSS (Equity Linked Savings Scheme) is a open ended equity mutual funds which allows you to not only save tax upto Rs 1.5 lakhs, under Section 80C of the Income Tax Act 1961, gives dividend which are tax free in the hands of the investor also to invest towards building wealth for the future. The mandate of this fund allows the fund manager to invest in companies for a long term horizon and remain invested. This will allow the fund to realise the potential value of the companies, as they grow, and help build wealth for you. ELSS

Tax Saving through ELSS

  • ELSS (Equity Linked Savings Scheme) are diversified equity funds with a lock-in period of 3 years
  • These funds provide a tax benefits under Section 80C of the Income Tax Act, 1961 according to which investment upto Rs 1.5 lakhs .
  • ELSS is deductible from taxable income
  • ELSS helps in saving considerable amount of taxes if planned efficiently as shown in the table below
 Taxable Income (Rs) Tax before investment in
Maximum Amount to invest
in ELSS (Rs)
Taxable income post ELSS investment (Rs) Tax after Investment (Rs)
400000 15000 150000 250000 0
600000 45000 150000 450000 20000
800000 85000 150000 650000 55000
1000000 125000 150000 850000 95000
1200000 185000 150000 1050000 140000

(The above information has been given for reference purposes only. Investors are advised to consult their own tax/financial adviser before taking any decision on investments. The tax calculations shown above are as per the income tax slab applicable to Individual/HUF assessee for FY 2014-15 exclusive of cess and surcharge)

ELSS vs. Other Tax Savings Products

Particulars PPF NSC ELSS
Tenure 15 years 6 years 3 years
Returns 8.70 % *
(Compounded Annually)
8.50 to 8.80 % *
(Compounded half-yearly)
Returns / Dividends are Market
linked and not assured
Minimum Investment Rs.500 Rs.100 Rs.500
Maximum Investment Rs.150,000 No limit^ No limit^
Amount eligible for deduction u/s 80C Rs.150,000 Rs.150,000 Rs.150,000
Taxation for interest Tax free Taxable Dividends and capital gain tax free
Safety/ Risk Highest Safety Highest Safety High Risk
Lock-in Period 15 Years – Partial Withdrawal after 6 years is permitted 6 Years 3 years

Source: http://finmin.nic.in – All rates shown above have been compounded wherever applicable.
*There is no upper limit on investments. However, investments of only upto Rs.150,000 per year are allowed to be claimed as deductions under Section 80C of Income Tax Act, 1961.

Points to remember while choosing an appropriate ELSS
You must always remember to do thorough research when you invest in an ELSS fund. You must look at the long term performance of the fund before putting your money in it. Also remember to look at the fund details like the fund manager’s investment approach, portfolio of the fund, the expense ratio of the fund and how volatile the fund has been in the past.

 How to invest ELSS funds online ?

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Tax Reckoner for Investments in Equity Mutual Fund schemes : FY 2014-2015

Capital Gain Taxation applicable to Equity Oriented Schemes

long term capital gains NIL NIL
Tax deducated at source = nil Tax deducated at source = nil

Long term capital gain means holding units for more than 12 months or 1 year

Short term capital gains 15%+10% surcharge +3% cess=16.995% 15%+10% surcharge +3% cess=16.995%
Tax deducated at source = nil Tax deducated at source = 16.995%

Short term capital gain means holding units for less than 12 months or 1 year



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For investors in the higher income tax bracket, FMPs deliver a better post-tax return than bank deposits.

The measures taken by RBI to tighten liquidity in banking system, short-term rates  increased sharply in recent weeks. Mutual Fund Houses has launched lot of NFOs of  Fixed Maturity Plans

Fixed Maturity Plan

A Fixed maturity Plan (FMP) is a closed-ended debt scheme for a fixed period of time, where in the duration of debt papers is aligned with the tenure of the scheme.

Features of FMPs

• FMPs generally invest in Certificate of deposits (CDs)issued by banks,Central and State Government securities like treasury bills,bonds and dated securities which are also called as State Development Loans (SDLs) then in Commercial Papers (CPs), money market instruments , and corporate bonds.

• FMPs provide predictable return & are not subject to interest rate risk.

• On tax adjusted basis, return on FMPs are better than bank FDs, as one year Plus FMPs qualifies Long Term Capital Gain Tax.

Mutual fund investors have the option of paying capital gains tax at 10.3% (withoutindexation) or at 20.6% (with indexation).


Currently one-year CDs offer close to 9.9 per cent and CPs offer around 10.8 per cent. The longer tenure funds invest in non-convertible debentures issued by companies. As FMPs invest in debt instruments that have the same maturity as that of the fund, they are free from interest rate risk. Given the sharp depreciation in the rupee, the RBI will not be in a hurry to reverse its measures. Hence the short-term rates will continue to remain higher.

Thus, shorter tenure funds, which are less risky, can offer anywhere between 9.8 and 10.4 per cent, depending on their portfolio. Bank deposits of similar tenure offer 9 to 9.5 per cent currently.

As shown above clearly Fixed Maturity Plans gives superior returns comparing to Bank Fixed Deposit. Especially for Income Tax payers who are in higest tax bracket (30% ) , for investors in the higher tax bracket have to deposit a 12.5% rate of bank deposit to get net yield after tax as 9%

Also there are certain FMPs which gives a double indexation benefit ,investing in these gives net yield after tax as 9.5%. as shown charts as above

Recently Birla , Reliance , HDFC also ICICI mutual funds has launched Fixed Maturity Plans of 367 days; it is just two days more than one year. So, if investors invest in this, they can get benefit of short-term rate hike and also because it is more than one year. Therefore, when it comes to calculating returns, it will be taxed at 20 percent with index. So, these are good things, investor should invest in these FMPs but only if one needs liquidity in between then one should avoid.


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Savings into Debt Funds vis.a.vis Fixed Deposits

In India most investors go to any extent to save income tax and run around to make last-minute investments. Last minute tax planning is an age-old practice that forces tax payers to make hasty and often wrong decisions. Typically, some individuals invest more than the required amount to save taxes. They also end up parking money in wrong products in the process, which may have an adverse impact on their cash flows and return prospects.

It is not surprising that the insurance industry do most of its business during the tax saving season between January and March every year. Often investors tend to buy products or make investments without doing the due diligence on their total tax structure. Investors happily write out cheques to buy low-yield traditional insurance policies or take additional medical cover as long as it saves their income tax. But this enthusiasm to avoid the taxman is missing when they invest in debt instruments.

Your tax-saving investments should depend on your financial needs and goals. These should be distributed among assets classes to reap the dual advantage of lowering tax burden as well as building your portfolio. Equities are known to offer high return over the long-term. However, it does not mean you should ignore debt investments.

The safety factor of debt funds

Debt funds are a direct alternative and competitor for bank fixed deposits. The primary areas of difference are safety and taxation (and thus returns), with mutual funds holding the advantage in tax-adjusted returns and fixed deposits in safety.

In theory, banks are safer but, there is no practical difference between the safety level of banks and debt funds as far as defaults of underlying investments go. As with all mutual funds, there are no guarantees in debt funds. Returns in debt funds are market-linked and the investor is fully exposed to defaults or any other credit problems in the entities whose bonds are being invested in.

However, in practice, the fund industry is closely regulated and monitored by the regulator, Securities and Exchange Board of India (SEBI). Regulations put in place by SEBI keep tight reins on the risk profile of investments, on the concentration of risk that individual funds are facing, on how the investments are valued and on how closely the maturity profile hews to the fund’s declared goals.

In the past, these measures have proved to be highly effective and except for some small problems during the 2008 global financial crisis, debt fund investors have not had any nasty surprises. Practically speaking, you would be entirely justified in expecting not to face any defaults in your debt fund investments.

Fixed deposits, recurring deposits and small savings schemes get a big chunk of the household savings pie, while tax-efficient debt funds make do with small fragment. More than Rs 4,90,000 crore of household savings are in bank deposits, while debt fund investments by individuals add up to about Rs 18,300 crore. This minuscule allocation to debt funds is despite the huge tax advantage and other benefits that these schemes offer.

The effect of tax differential 

Returns from bank fixed deposits are interest income and as such have to be added to your normal income. Since many investors are in the top (30 per cent) tax bracket, this effectively reduces return by an equal percentage.

With debt funds, the returns are classified as capital gains for investments of over 12-months for and are thus taxed at 10 per cent or 20 per cent with indexation which adjusts for inflation during the holding period. If you take into account indexation benefits, then the difference between FD returns and debt fund returns are quite large. And if you can time the investment to get double indexation benefits for say a 370 day deposit, then it’s quite a bonanza. Below is an illustration of effective returns from both the avenues;



Income Funds

Bank Fixed Deposit

Investment Amount (Rs)



Rate of Return/Interest Rate (%) (p.a.)



Tenure (Days)



Gross Value after 1 year (Rs.)



Gain on Investments



Capital Gain Tax (@11.33%)


Tax on Interest Income (@30.9%)


Net Value after tax (Rs)



Effective Rate of Return (%)



Postponing the tax liability

The lower tax rate on capital gains, for instance, is just one of the benefits of these schemes. A major draw is that one can indefinitely postpone tax liability by investing in debt funds. The interest income is taxable on an annual basis, irrespective of the time that investor actually get it. Investor need to pay tax on the interest accruing on a cumulative fixed deposit or a recurring deposit even though the instrument has to mature in 5-10 years.

On the other hand, investments in debt funds will not have a tax implication till it is withdrawn. This also makes these funds the best way to invest.

Taking Advantage of Clubbing of Income

When the money is invested in minor child’s name, the income from the investment is treated as that of the parent who earns more. This clubbing of income is meant to prevent tax leakage, but investments in mutual funds can circumvent this provision. If the funds are redeemed after the child turns 18, the capital gains will be treated as the child’s income, and not parents.

Setting off Losses

There are other ways to earn tax-free income from debt funds. You can set off losses from other assets against the gains from these schemes. Tax rules allow carrying forward of capital losses for up to eight financial years. For instance, if you had booked short-term losses on stocks and equity funds when the markets slumped in December 2008, you can adjust them against the gains from your debt fund investments till 2015-16.

What if you need the money before one year? Any short-term capital gain is taxed as income, but you can get past this with the dividend advantage. Though they are tax-free, dividends of debt schemes reach the investor after the deduction of dividend distribution tax. This is 13.8% for debt funds and 27.4% for liquid funds. Even so, this is lower than the 30% tax an investor in the highest income bracket will pay on withdrawals before one year of investment.

Liquidity Advantage

Apart from these tax advantages, debt funds also offer a higher liquidity and more flexibility than a bank deposit. When you invest in a fixed deposit, you lock up money for a certain period. Sure, the deposit can be broken any time, but you end up sacrificing returns. There is usually a small penalty to be paid when you withdraw prematurely.

Debt funds also levy an exit load, but the quantum of load as well as the minimum period of investment varies across funds and categories. Most liquid funds and ultra short‐term funds, for instance, do not have exit loads, but medium‐term income funds may charge 0.25‐0.5% if you leave within six months or a year of investment. In some cases, this may even be as high as 1‐2%. So it pays to check the exit load and minimum investment period before you buy a fund.


The other advantage is the flexibility and ease of investment. The Public Provident Fund has annual limits—the minimum investment is Rs.500 and the maximum Rs 1 lakh. The tenure is fixed at 15 years but can be extended in tranches of five years. The Senior Citizens Savings Scheme has a maximum limit of Rs 15 lakh per individual and is for five years. No such limits apply to mutual funds. You can invest as much as your pocket allows. “Unlike small savings schemes, there is no limit to how much an individual can invest in debt funds,”

Besides the convenience of SIP investing, facilities such as systematic transfer plans (STPs) and systematic withdrawal plans (SWPs) make things easier for the debt fund investor.

Unaware of debt funds as a fixed income product, many investors opt for Banks fixed deposits or small savings schemes. But, Debt funds if used properly and selected wisely can be a good alternative to other fixed income investments.

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Understanding Modified Duration while investing debt funds

Let’s say I am a stockist of winter clothes such as sweaters and mufflers. In anticipation of a good winter, I have stocked clothes in excess. My biggest concern is whether I will be able to sell all these before the onset of summer.

Let’s say if the summer steps in earlier than expected, then what do I do? Naturally to clear the stock I will have to lower its price.

Contrary, if for some reason the winter gets more severe and prolonged, then what could happen? In such a situation I will charge a premium for the goods that I have in stock and since I have a large supply, I would therefore make more money.

Thus, the behavior of an external factor seems to be having a major impact on the prices I charge in the market.

Now keep this in mind as I attempt to explain “modified duration” for debt products.

Modified Duration by definition expresses the sensitivity of the price of a bond to a change in interest rate. The change in interest rate can be linked with the season change as explained in the previous example.

• So if the modified duration of a debt fund is less, it is similar to having less stock so that even if the interest rates were to change, the impact on price would be less.

• On the other hand, if the modified duration is higher, it would be like having excess stock so that if interest rates were to change, the impact on prices would be large.
So higher the modified duration, higher is the risk of price fluctuation and lower the modified duration, the lower would be the price fluctuation.

Basically, the price of a bond and the interest rate have inverse relationship, i.e. if the interest rates rise, the price of the bond would fall and vice versa. The modified duration explains the extent of rise or fall in bond price, given a change in interest rate. Mathematically, CHANGE IN PRICE OF A BOND IS THE ARITHMETIC PRODUCT OF MODIFIED DURATION OF THE BOND AND CHANGE IN EXTERNAL INTEREST RATE.

So, if a Fund Manager feels that the interest rates are going to rise (similar to expecting the summer setting in sooner than expected), he would reduce the modified duration of the portfolio. Alternatively, if he feels that the interest rates are to fall (similar to expecting the winter to last longer), he will maintain a higher duration and benefit from the fall in interest rates.

Having understood the concept let us now use modified duration to calculate the change in price of a bond for a given change in interest rate.

Change in bond price = – Modified Duration * % Change in yield

The negative sign in this equation indicates inverse relationship between change in yield and change in bond price.

For example, if the modified duration of a bond is 5 and yield is expected to fall by 2% in a year, expected change in price of the bond (on account of change in yield) can be calculated as

Change in Bond price = – 5 * -2% = + 10%.

Similarly, if the modified duration of a bond is 5 and yield is expected to rise by 2% in a year, expected change in price of the bond can be calculated as

Change in Bond price = – 5 * 2% = – 10%.

Some key points about modified duration:

1. A “Bond” with a lower “modified duration” implies that the “returns” are more from accrual income than from capital gains.

2. A “Bond” with a higher “modified duration” implies that the “returns” are more from capital gains than from accrual income.

3. Maturity remaining the same a high coupon yielding bond would have a lower duration and hence be less sensitive to changes in external interest rates as compared to a low coupon yielding bond.

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ELSS vs PPF / NSC and FDs – 80 C Income Tax Investment options

ELSS funds are a far better bet than PPF/NSC or other tax saving schemes to help their clients not only save tax, but also create long term wealth. Many clients are however not so convinced, given the last 5 years equity market performance.

This data has helped reassure the clients and restore faith in ELSS funds as the preferred destination for their tax saving investments.Reproduced below is a set of tables that explains the comparison of investments, Each table is for a 5 year period :
2000-2005, 2001-2006 and so on until 2007-2012. In each table, demonstrates how an illustrative ELSS fund and compares this with performance of PPF/NSCs and bank FDs over the same period. Assume that the investor invests Rs. 100,000 each year in the same ELSS fund over a 5 year period and compare that with a similar investment strategy
of Rs. 100,000 per year for 5 years in bank FDs (at the then prevailing rates) and similar amounts in NSCs/PPF over the same 5 years.
The graphical representation alongside each table shows how the portfolio value moves on a year of year basis. Valuation lines of PPF/NSC and bank FDs are predictably straight and ELSS is predictably choppy. But, overall portfolio value of the annual investments in ELSS comfortably beat the returns from bank FDs and NSCs/PPF. The graphs visually depict
that there are times when the portfolio value of ELSS dips below the fixed return alternatives – but, over all but one 5 year periods, long term wealth has truly been created by ELSS funds and not their fixed return competitors. Even in the solitary case where ELSS loses out (2004-2009 period), where the portfolio period closes in the worst bear market we have seen in recent history,But if the portfolio would have been held for just 1 more year, ELSS would have come out comfortably on top.

Here are the tables that we have been discussing :


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“I will tell you how to become rich. Close the door.”

“Be fearful when others are greedy. Be greedy when others are fearful.”

                                                            – Warren Buffet










Time in the Market more important than Timing the Market !


  • People looking at the market levels to invest try to time the market
  • People feel if they regularly time their investments in market they will yield better returns than others

Now let’s take a case of two friends Lucky and Not So Lucky. Lucky was able to pick the market low every month and invested Rs.1000/- while Not So Lucky was always finding himself investing at the market high every month.

Both invested Rs.1000/- every month from Jan 1991 till May 2012.

            Can you guess the difference between returns both earned?

Rs.1000 invested every month assuming Lucky invests at the lowest intraday point of the month while Not So Lucky invests at the highest intraday point of the month.

*Past performance may or may not be sustained.


  • Equities have been the best performing Asset class internationally and also in Indian markets
  • With India’s GDP projected to grow to $ 4.6 trillion by 2020, Indian equities may grow in multiples on the back of good corporate earnings as has been observed in developed economies
  • BSE Sensex is at around 13x  to 13.5x forward earnings P/E which is lower than the historical average of around 15 to 16x forward earnings – almost 20% discount to historical average
  • Markets have rewarded investments done at lower P/E’s across time scales
  • Time in the Market more important than Timing the Market

                                                 Thank You

Disclaimer: The views expressed in this presentation are of Tata Asset Management Ltd. and are in no way trying to predict the markets or to time them. The views expressed are for information purpose only and do not construe to be any investment, legal or taxation advice. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management will not be liable in any manner for the consequences of such action taken by you. Please consult your Financial/Investment Adviser before investing The views expressed in this presentation may not reflect in the scheme portfolios of Tata Mutual Fund. This presentation has been prepared using information believed to be accurate at the time of its use.

Statutory Details: Constitution: Tata Mutual Fund (TMF) has been set up as a Trust under the Indian Trust Act, 1882. Sponsors: Tata Sons Ltd.& Tata Investment Corporation Ltd. Trustee: Tata Trustee Company Ltd., Investment Manager: Tata Asset Management Ltd.

Mutual Fund investment is subject to market risks, read all scheme related documents carefully.

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Systematic Transfer Plan: Smart and convenient way to invest

Systematic Transfer Plans help you transfer a predetermined amount at regular intervals from one MF scheme to another.  

What is a Systematic Transfer Plan (STP)?

An STP enables an investor to transfer money from one mutual fund scheme to another within the same AMC. Investments are not withdrawn completely at one go, but systematically transferred (or switched) between different asset classes, for example, from debt to equity.

The AMC provides various options which determine the amount and frequency of transfer of funds. Units from the source fund are sold and the proceeds are used to buy units in the target fund.

What are the types of STPs?

STPs are offered in three variants – fixed, capital appreciation and swing.

In a fixed STP, predetermined amounts are regularly transferred from the source scheme to the target scheme. Let’s assume that an investor has invested Rs 1 lakh in an equity scheme, and wants to transfer Rs 20,000 to a debt scheme every month. If the NAV for the debt scheme is Rs 100 in the 1st month, the investor will be allotted 200 units of the debt scheme. If the NAV of the debt scheme falls to Rs 50 in the next month, the investor will get 400 units. The transfer continues until all the units in the source scheme are transferred to the target fund.

In a capital appreciation STP, only capital gains (a percentage or the entire profit margin, as per the investor’s choice) are transferred to the target scheme. However, this option is only available with growth plans and not with dividend payout schemes. Assume that an investor has invested Rs 1 lakh in an equity fund with an NAV of Rs 100. This gives the investor 1,000 units. If the NAV goes up by Rs 20, and the investor wants a transfer of 50% of the capital gains, Rs 10,000 will be transferred to the target fund.

What is swing STP?

A swing STP tries to achieve the target market value which can be more or less than the lump sum invested in a debt scheme. To avail of a swing STP facility, an investor needs to invest a minimum lump sum. Swing STP works on the concept of value cost averaging. Here, the system enables the investor to buy more units when the index declines and less when the market goes up, thus booking some profits at regular intervals.

How does swing STP work?

Let’s say Mr Smart wants to invest Rs 36,000 over a period of 12 months in a particular fund called Fund Z. In order to do this with the swing STP mode, Mr Smart has to first make a lump sum investment of Rs 48,000 in any fund belonging to the same fund house, let’s say Fund A. Having done this, Mr. Smart will instruct the fund house to transfer Rs 2,000 every month from the existing Fund A to the target Fund Z.

The process will start at the beginning of the first month with the first installment of Rs 2,000 being transferred into Fund Z from Fund A. Assuming the NAV of Fund Z is Rs 10 per unit, Mr Smart will get (2000/10) = 200 units of Fund Z.

When the NAV of the target fund goes up

Now, in the following month, let’s assume the NAV of Fund Z goes up to Rs 12. The swing STP scheme will compare the total market value of the portfolio and Mr Smart’s target monthly investment. So, now the total market value of the portfolio stands at (200 units*Rs 12) = Rs 2,400 and Mr Smart’s target monthly investment for the prevailing month should be (Rs 2,000 + Rs 2,000) = Rs 4,000. This gives rise to a difference in the two numbers.

The swing STP now takes the difference of the market value of the portfolio (Rs 2,400) and the target value, which is Rs 2,400 and the target value of Rs 4000 i.e. Rs 1600 and invests this difference to purchase the units of Fund Z. This means that Mr. Smart has purchased (1600/12) = 133 units of Fund Z.

When the NAV of the target fund goes down

Now, next month the NAV of Fund Z is at Rs 8 and hence the market value of the portfolio stands at ((200 + 133) units * Rs 8) = Rs 2664, however Mr. Smart’s target investment by this month should be (Rs2000 * 3 months) = Rs 6000.

Again the Swing STP will take the difference of the market value of the portfolio and the expected target value (Rs 2664 – Rs 6000) = Rs 3336 and invest it in Fund Z to purchase additional units. So in this month Mr. Smart will get (3336/8) = 417 units will be purchased. As you can see the Swing STP has enabled the investor to pick up more units when the NAV is lower.

The total units held by Mr. Smart at this point is (200+133+417) = 750 units. So the swing STP essentially enables the investor to cushion himself adequately when the NAV is higher and picks up fewer units of the target scheme. Similarly when the NAV is lower the Swing STP picks up more units of the target scheme.

What is the advantage of STP?

The investor can keep his money invested instead of leaving it idle. If he wants a transfer from debt to equity funds, the money is systematically channelized into the desired equity fund under an STP. In this manner, the investor continues to get returns from the debt fund, and can gradually increase his investments in the equity fund.

STP gives the investor the advantage of regular investing which SIPs offer and regular withdrawal offered by SWPs. Since the transfer happens from one scheme to another, the investor stays invested at all times.

Are there any disadvantages?

The investor can transfer money only between the schemes of the same fund house. He can’t pick the best of what the industry has to offer. Tax can also bite, because a transfer is treated as a sale of the source fund and as a fresh investment in the target fund, inviting capital gains tax.

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why your portfolio should have Gold ?

Although gold prices are at present hovering near their all-time high in the Indian market, investors are heaping-up gold in their portfolio. But interestingly, it is not physical gold which they are heaping-up, instead it is Gold ETFs (GETFs), in which they are evincing interest into.

Ever since the worries of Euro zone debt crisis have gripped the global economy, investors in India too are taking refuge under the precious yellow metal (through GETFs) due to its trait of being a safe haven. This is clear depicted by the ascending trend of the chart above where Assets Under Management (AUM) of GETFs, have swelled from Rs 4,800 crore of AUM in April 2011, the AUM under GETFs have risen to Rs 10,312 crore.

We believe that the rising trend in GETFs indicates that wisdom is dawning upon investors in India, as they have shown preference to invest in gold the smart way.

We are of the view that exposure to gold (through GETFs) should be an integral part of one’s portfolio and can help in diversification. This is because of negative correlation which gold has with other assets like equity – especially during uncertain times. Given the gloom clouds surrounding the global economy due to the burgeoning debt crisis in the Euro zone and slump in economic growth across economies, we think that one should continue to invest in gold, as the secular uptrend appears intact. Yes, any temporary relief measures taken by the Euro zone, like the famous bailout packages may bring in some consolidation in the gold prices but unless a long term solution is chalked out by the Euro region, gold will continue to outperform other asset classes. In our view, one should always have a minimum of 5% – 10% allocation to gold and invest in it with a long- term investment horizon of 10 to 20 years.

If you do not wish to open a demat account, you can invest through a gold fund of fund (FoF). Such a fund just invests in the open-ended Gold ETF with the advantage of not needing a demat account.

check the details in other post Different types of Gold Funds

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