​Buy & Cry, the traditional approach on purchasing Gold!

Hey Momeys, hope you had a great Diwali filled with loads of shopping, feasting, dressing up and gossiping!

As we get back to our normal routine lives, the feeling that the festival is over takes over. While I was trying to keep up with my little one this afternoon, my neighbour came in with her daughter. Kids started playing, leaving us to do what we do best – gossip! She showed me her recently bought beautiful gold earrings and then narrated the long story behind it. She told me how she and her husband went to a branded jewellery store to buy gold bangles on Dhanteras, as a tradition, but ended up buying these earrings.

They went to the store in late afternoon to avoid the festive rush but could not escape the buzz. She was clear that she wanted to buy bangles for her but the store was so crowded that each sales person was handling around 6-7 families at a time.  The more she tried to inquire, the harder she got pushed back. Amid this chaos, finally she had to settle for gold earrings as she needed to buy something atleast on the ocassion of Dhanteras. Well, their hardship didn’t quite end there; they had to spend an hour and a half to pay for those earrings before they could leave the store. The worst part of her story was that even after taking all that trouble she didn’t like the earnings and was repenting her decision of not buying the bangles.

Now she wanted to know our side of story – what we bought on Dhanteras and from where. I said well my husband bought gold ETF during his tea break in office. We bought 99.5% pure gold within 5 minutes sitting miles away from the maddening rush at the Jewellery stores!! Her next obvious question was how we did pooja without the physical gold? Well we took the print of our account statement – after all we are moving towards Digital India!  She was completely stunned!!

Here’s quick maths for all of you to show the cost difference between my gold & my neighbour’s gold:

She paid Rs. 32,966 [including making charges (10%) + GST (3%)] for 9gms of 91.6% (22k) pure gold (P.S. and she didn’t like what she bought)

We paid Rs. 25,026 [including the brokerage charges (0.75%)] for 9gms of 99.5% pure gold

Apart from the costs involved, another major difference was our motives behind buying the gold – Mine was to invest in gold for my daughter’s wedding (she’s 5 right now) and hers was to buy anything made up of gold for Dhanteras. So what was your motive for buying gold Momeys? Hope your purchase did not make you cry. Just have to buy smart!

Have you planned for your child’s future?

Diwali storms up the social whirlwig; food, dress up and meet up is all on cards. The usual worry of how to keep the kids gainfully occupied is thankfully averted during such catch ups. They find playmates and enjoy their time, which for us parents is a huge load off.

 This diwali, we too had some great fun socializing. A new parent couple among our friends got talking about how responsibilities are keeping them engaged. Life has been very different after their child’s birth and one responsibility they can’t get a handle on is money planning. More discussions among the group led to finding out that it is a rather widespread question, parents are grappling to figure. It obviously became imperative that a blog post covers the topic of planning our children’s future.

Before setting out on a task, we have to understand what is it going to achieve. So parents unanimously voted Education and Marriage as goals to work for. Both are gargantuan expenses and require disciplined action. Depending on your age, children’s age, your risk profile, choice of education field and costs involved you will have to ascertain a sum required after a said amount of time. We are mentioning the tools you can use for investing. 

SIP

When you keep a horizon as long as your child’s growing up years, SIPs in small to mid cap funds and balanced funds are your best bet. They let your money gain with the benefit of compounding year on year. For those with some risk appetite, consider funds which invest a considerable part in equities of growing companies. Balance funds are slightly less risky because they have equity and debt (such as term deposits, bonds) instruments both.

For the uninitiated, SIP is Systematic Investment Plan better known as ‘the good EMI’. You invest every month a fixed sum as small as Rs. 500 into a mutual fund. The fund is managed by a team of experts and they in turn invest in various instruments to generate returns. We have more posts on MFs coming momeys 😄


Sukanya Samriddhi Yojana
This has to be our favorite for those who have daughters. The scheme encourages parents to build a fund for the future education and marriage expenses for their female child. The scheme currently provides an interest rate of 8.3% p.a. (new rates are likely to be announced). It allows deposit upto Rs. 1.5 lacs in the name of your daughter every year and it matures when she reaches 21 years of age. You can either choose monthly or yearly contributions. Momeys should absolutely consider monthly contribution!

Insurance

Well it’s not our favorite, but we have to bring it into discussion to give you our reasons. If you search online for children investment options, you will find a gazillion ads by Insurance companies luring you with child plans. What should you do? Well our advice would be to ignore. They are mostly selling ULIPs to you which are far inferior in returns to mutual funds and charge expensive premiums. You might as well directly invest in MFs through SIP.

However, we have to add that you must take insurance, as life cover to safeguard your family and children in an unlikely event.

Gold ETFs

Gold ETFs are exchange traded funds that passively track the performance of Gold Bullion. These funds buy gold with investor’s money (on the behalf of investors) and convert it into units. 

Gold Exchange Traded Funds can also be an option if you want to invest for using them during marriage. These are traded on stock markets and are a great alternative to physical gold.

With children, you wouldn’t want to take a chance. So invest today for their tomorrow.