I recently received the proceeds from the maturity of a bank fixed deposit. I do not wish to continue deposits in banks anymore because of low interest rates. I want to put Rs 1 lakh into gold funds. Is this a good time to invest in gold?
Dhruv Pandey, Noida
The move to not continue bank FDs is a wise one. Gold prices in recent days have gone up due to the festive mood around it. Your decision to invest in gold should be based on what you expect from the investments—if it is returns, you are likely to be marginally better off than what the bank FD has to offer. If the intent to invest is based on a future need for gold; say for a wedding in the family or as a gift to children, then the move is right, as the money will be in the same asset class that you wish to consume it in.
Investing in gold funds would work well if you invest it regularly through an SIP. You could do that by either transferring the Rs 1 lakh you gained into a liquid fund, from where you could instruct the commencement of an SIP into a gold fund. Alternately, you could let the money be in your bank account and initiate an SIP into a gold fund from there.
