I want to invest Rs 10 lakh in gold from my pension fund. Within two years, gold will be required for my daughter’s wedding. Should I buy it from a jeweller or from the commodity market? Which way is more profitable? – James Joseph, Thiruvananthapuram
Buying gold in an electronic form (such as ETF or a Gold Fund) is always recommended, especially when your actual requirement is in the future (like 2 years in this case). They are cost-effective. While the price movements would be common for physical gold and ETF (assuming similar purity), the advantage of having it electronically is that you can always liquidate the electronic gold after two years at the then prevailing price of gold (market price) and buy the actual jewellery with the trending designs of choice at
that time. Besides, buying digital gold makes it less prone to theft, thereby ensuring safe storage.
Can you suggest funds that are suitable for investing for three years? Will I continue to get benefits after three years even if I discontinue the SIP halfway? Also, please explain the procedure of SWP?
– Ved Sharma, Patnat
Three years is a short-term period for investing in core equity funds. You may consider equity-oriented hybrid schemes such as Aggressive Hybrid or Balanced Advantage categories. If you wish to have a conservative approach, then you should look at equity savings or debt-oriented schemes. The following
are our recommended Aggressive Hybrid / Balanced Advantage schemes:
Aggressive Hybrid:
• Mahindra Manulife Aggressive Hybrid Fund-Reg(G)
• Edelweiss Aggressive Hybrid Fund-Reg(G)
• UTI Aggressive Hybrid Fund-Reg(G)
Balanced Advantage:
• HDFC Balanced Advantage Fund(G)
• Tata Balanced Adv Fund-Reg(G)
• ICICI Pru Balanced Advantage Fund(G)
You can discontinue your SIPs at any point in time. Accumulated units will continue to participate in the market (reflecting the ups and downs). If the market continues to grow in the long run, the units will also reflect the same in their returns (subject to the scheme’s portfolio). Systematic Withdrawal Plan (SWP) is an option for investors to withdraw fixed amounts at regular intervals, for example – monthly, quarterly, or yearly from the investment they have made in any mutual fund scheme. Investors can submit the physical or online request for SWP to the registrar or AMC.
The choice of asset class / scheme would largely depend on one’s risk appetite and investment duration.
As a retired person, I want to invest Rs 10 lakh in debt funds for a quarterly regular income. Is it possible to get an 8% return? Please suggest the best 3-4 funds. – Madhu Prakash, Mandya
Given the recent interest rate levels, you can expect around 7% to 7.5% on a yield-to-maturity basis and then plan your withdrawals. It is suggested to prefer low-duration debt funds instead of high-duration schemes. Following are our rated Low Duration and Short Duration schemes:
Short Duration
• HDFC Short Term Debt Fund(G)
• Nippon India Short Term Fund(G)
Low Duration
• Axis Treasury Advantage Fund-Reg(G)
• Nippon India Low Duration Fund(G)
• DSP Low Duration Fund-Reg(G)
