FIXED -DEPOSIT , MUTUAL FUNDS & GOLD

Study of Various Investment Product

Presented By:-Pooja J Soni

GOLD

Gold Exchange Traded Funds

There are enough reasons why gold should be included in any investor's portfolio whether in physical or paper form. Investing in gold ETFs will give the investor all the advantages of investing in gold while eliminating drawbacks of physical gold -- cost of storage, liquidity and purity, among others

Gold ETFs allow investment in gold in small denominations, which makes it easier for the retail investor to participate. On the secondary market, the minimum lot is one unit. This enables the investor to accumulate units over time and reap the benefits of rupee cost averaging. The units can be redeemed either from the fund directly or from the market.

Why should an investor invest in Gold ETF?

Gold is considered as a Global Asset Class

Gold is used as a Hedge against Inflation

compared to equities

Held in Electronic Form

Store of value

Extremely Liquid

Physical GoldThere are many savings and investment options available in India. One of the options is gold. Gold has been valued since prehistoric times and is the investment option that has been seen as the ultimate form of safe haven investment and the only true form of wealth.

Gold has been popular in India because it acted as a good hedge against inflation. There is so much uncertainty in the world in terms of economic growth and geopolitics, it is no surprise that many investors, big and small have chosen to hedge(barrier of closely growing bushes ) their investments through gold

Gold is an important and popular investment for many reasons

Gold remains as an integral part of social and religious customs, besides being the basic form of saving.

Gold has aesthetic appeal .Its beauty recommends it for ornament making above all other metals.

Gold is a currency that has no borders and does not need to be honored by any governmental obligations.

Gold has long proven ability to retain value and appreciate in value.

Gold is readily available in a standardized form.

Why invest in physical gold?

Top Reasons to Invest in Physical Gold

1.Gold has always been, and will always be, the most legendary precious metal in the world.

2.Gold will always be in demand, and demand is increasing.

3.Gold is an inflation-proof investment.

4.Unlike paper currency, stocks and bonds, gold will never loses its intrinsic value.

5.Gold maintains its value through political and social upheavals, wars, and natural disasters.

9.No other investment has the wealth preserving power of gold!

6.A tangible and liquid asset, gold is the only truly international currency.

7.The current U.S. debt and trade crisis will continue to push gold prices up.

8.Physical (allocated) gold is the most secure way to invest in gold.

Parameter Physical Gold Jeweller

How Gold is held Physical (Bars / Coins) Physical (Bars / Coins)

Pricing

Linked to International Gold Prices, 10%-20% mark-up charged by banks on spot price.

Differs from one to another. Neither transparent nor

standard.

Making Charges Charges are incurred Charges are incurred

Impurity Risk High High

Storage Requirement Locker / Safe Locker / Safe

Resale Conditional and uneconomical

Conditional and uneconomical

Difference

Parameter Physical Gold Jeweller

Convenience in Buying / Selling

Buying is not possible at a high price where as selling is possible at

high price.

Less convenient, as Gold needs to be moved

physically

Risk of Theft Yes, possible Yes, possibleWealth Tax Yes Yes

Long Term Capital Gains Tax

LTCG of 20 % only after 3 years. Wealth tax of

1% of incremental amount over specified

exemption limit.

LTCG of 20 % only after 3 years. Wealth tax of

1% of incremental amount over specified

exemption limit.Reliability No assurance of quality No assurance of quality

Regulatory Standards There are standard gold councils which assure the purity of gold like

the World Gold Council.

There are standard gold councils which assure the purity of gold for

investors.

Liquidity It is easy to convert gold into money at any time

and will fetch the current market price

prevailing at that time.

Becomes difficult to sell jewellery and convert it

into money. Also, the investor will face the

loss of making charges at the time of sale.

Mutual fund

Concept of MUTUAL FUND

A mutual fund is “A professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities”.“A pooled investment, in which several people give their money to a professional fund manager to invest in return for a fixed annual fee. The money will be invested in a range of different types of assets. The assets in which the fund can invest are clearly stated in the fund Prospectus.”

Investor

Fund Manger

Securities

Returns

Pool their money with

Invest InGenerates

passed back to

Types of MUTUAL FUND Schemes

BY STRUCTURE : * Open – Ended Schemes * Close - Ended Schemes * Interval SchemesBY INVESTMENT OBJECTIVE * Growth Schemes * Income Schemes * Balanced Schemes * Money Market Schemes OTHER SCHEMES * Tax Saving Schemes * Special Schemes

Sector Specific Schemes

Wide varieties of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.

Regulatory of MUTUAL FUND in INDIASEBI

The capital market regulates the mutual funds in India. SEBI requires all mutual funds to be registered with them. SEBI issues guidelines for all mutual funds operations-investment, accounts, expenses etc. Recently, it has been decided that Money Market Mutual Funds of registered mutual funds will be regulated by SEBI through (Mutual Fund) Regulations 1996.

RBI

RBI, a supervisor of the Banks owned Mutual Funds-As banks in India come under the regulatory Jurisdiction of RBI, banks owned funds to be under supervision of RBI and SEBI. RBI has supervisory responsibility over all entities that operate in the money markets.

MINISTRY OF FINANCE (MOF)

Ministry of Finance ultimately supervises both the RBI and the SEBI and plays the role of apex authority for any major disputes over SEBI guidelines.

COMPANY LOW BOARD

Registrar of companies is called Company Low Board. AMCs of Mutual Funds are companies registered under the companies Act 1956 and therefore answerable to regulatory authorities empowered by the Companies Act.

STOCK EXCHANGE

Stock Exchanges are Self-regulatory organizations supervised by SEBI. Many closed ended funds of AMCs are listed as stock exchanges and are traded like shares.

OFFICE OF THE PUBLIC TRUSTEE

Mutual Fund being public trust is governed y the Indian Trust Act 1882. The Board of trustee or the Trustees Company is accountable to the office of public trustee, which in turn reports to the Charity commissioner.

Fixed deposit

Fixed Deposits

If you believe in long-term investments and wish to earn higher interests on your savings, invest your money in Fixed Deposit. A fixed deposit is an investment account where money is deposited for a fixed period and the interest does not fluctuate.

A fixed deposit is meant for those investors who want to deposit a lump sum of money for a fixed period; say for a minimum period of 15 days to five years and above, thereby earning a higher rate of interest in return. Investor gets a lump sum (principal + interest) at the maturity of the deposit

Bank fixed deposits are one of the most common savings scheme open to an average investor. Fixed deposits also give a higher rate of interest than a savings bank account.  The facilities vary from bank to bank. These deposits are fairly safer because banks are subject to control of the Reserve Bank of India

Features

Choice of investment plans

Partial withdrawal permitted

Safe custody of fixed deposit receipts Auto renewal possible

Loan facility available

Benefits

Potential to earn compound interest by reinvesting the principal amount along with the interest earned during the period.

No penalty for premature withdrawal.

Flexibility in altering period of deposit, maturity and payment instructions, principal amount and rollover mode before maturity of the rollover deposit.

Higher rate of interest on Fixed Deposits for Senior Citizens.

Conclusion

After studying the various aspects of investing in mutual fund, F.D & Gold I came to know that the gold ETFs is more convenient for investors due to it’s benefits i.e. security, good price of gold and the constant demand of gold.

Thank You