Investing: Paras Adenwala

Is gold still a good option to put money into, or do you think it has run its course?
The allure for gold will always remain, considering continuing global uncertainties. Hence, allocating a small part of your portfolio to bullion is advisable.

I have a surplus of Rs 20,000 and I want to invest in stocks. Given that markets may go down further by March (experts’ view), should I invest now or wait?
We may witness some correction in the market, after the strong 12 per cent run, from the recent bottom. It may be a good idea to wait for a correction to invest your savings.

I am 24, working for a year now. I want to invest in equities for five to seven years. What kind of sectors are good for such a horizon?
The investment horizon seems appropriate for investments in equities. Sectors like banking, infrastructure, consumption, auto ancillaries and natural resources seem promising for investment.

Can equities be invested to save tax? How?
Yes, at the current levels of the markets, it makes good sense to save tax by investing in equity-linked saving schemes.

I am 26, and have recently started allocating some amount in SIP (systematic investment plan). I want to know how my investments would differ had I done an STP (systematic transfer plan). And, is STP similar to an SIP?
An STP is a plan where periodically a pre-decided instalment is transferred from one scheme of a mutual fund to another scheme of the same mutual fund. An SIP is a plan where periodically a pre-decided instalment is transferred from your savings bank account to a scheme of a mutual fund. Both are disciplined forms of investment. However, our vote would go for an STP, as the total returns on investment would be better compared to SIP, especially when allocation to equities is being increased at the cost of debt/fixed return instruments.

In a jeweller’s gold saving schemes, out of 12 instalments, one needs to pay 11. And, the jeweller puts in one month’s contribution. My daughter, who is 23, wishes to opt for this scheme to collect gold for her marriage. I don’t doubt the quality of gold, but I am not confident about the returns. Do you think buying gold in instalments will be better than buying gold at one go? What options are available?
Gold is always a good investment option, especially during uncertain times. The prices have abated recently, due to strength in the dollar. However, in the long term, the outlook remains positive. Hence, a small allocation to gold is certainly recommended. This exposure could be taken in instalments, considering the volatile nature of the metal. You may want to consider taking exposure to gold through a systematic investment plan in a gold exchange-traded fund of a mutual fund.

 

The writer is managing director & principal portfolio manager, Capital Portfolio Advisors. Send your queries at yourmoney@bsmail.in