The Most Authentic Guide on Personal Finance and Investments

Words of Wisdom : "The best way to teach your kids about taxes is by eating 30% of their ice cream." ~ Bill Murray

7 Golden Rules to buying Gold

1. If you are buying gold for personal use in the form of jewellery, treat it as a consumption. As an investment, jewellery will give poor returns due to high making charges included in the final purchase price of any jewellery.

2. If you are buying gold for investment purposes, Gold Exchange Traded Fund is the best form of investment. And, all gold ETFs are more or less the same, as their underlying investment is the same i.e. gold. The only point of differentiation could be the fund management expenses.

3. If you don't want the hassles of a demat account, mandatory for investing in ETFs, you can alternatively look at Gold Fund-of-Fund that in-turn invests in Gold ETF. But be prepared to pay fund management costs of two funds.

4. If you invest in equity-based Gold Fund (which instead of investing in gold, invest in shares of companies engaged in mining, processing etc. of gold), be prepared to bear the equity-risk. If gold does well, it doesn't necessarily mean that all companies engaged in gold will do equally well. Moreover, most gold funds invest in international market and so be prepared for currency risk too.

5. If you still prefer physical gold in the form of coins and bars, buy them from a jeweller, not a bank. This will be relatively cheaper. Also, banks cannot buyback gold; whereas selling gold back to the same jeweller will mean lesser deductions.

6. If you are willing to bet on short-term price movements in gold, trading in gold as a commodity through Gold Futures is the way to go. But beware...this is nothing but high-risk gambling...and I don't advocate gambling.

7. Finally, if you are investing in gold hoping to make big money, then beware. Long term average returns from gold are not likely to cross 10%...unless the world economy collapses and people rush to buy gold and only gold.

Dan Gable once said "Gold medals aren't really made of gold. They are made of sweat, determination and a hard-to-find alloy called guts."

With due apologies to him, I say "Wealth isn't made of money. It is made of discipline, persistence and a hard-to-find virtue call patience."

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