Pros and cons of investing in physical gold

Gold on Your Mind? Pros And Cons of Investing in Physical Gold

Gold is not only an attractive investment in the case of market stress but also Indians use gold auspiciously and consider it a sign of wealth. To put it into perspective, India is the second largest consumer of gold worldwide, followed by China. In India, gold is majorly used by the household, and its demand skyrockets during the festivals like Diwali and AkshayaTritiya and occasions like weddings.

However, it is wrong to say that gold can be purchased only in its physical form. People can also invest in gold through gold ETFs, gold funds, and sovereign gold bonds issued by the RBI.

When we talk about investing, diversification is an essential part of investing strategy if you are willing to optimize your portfolio by minimizing the risks and maximizing the average returns. Gold might be a better option during market stress, as it is a tangible asset. But it doesn't mean you can blindly put all your hard-earned money into gold without investigating all the other aspects of investment, making comparisons, and analyzing your requirements.

Let's discuss the pros and cons of physical gold investment.

Pros of investing in physical gold

Hedge against inflation

Gold holds the tangible value of the precious metal, which only rises over time if you look at the historical data. When inflation increases, the purchasing power of individuals decreases. If you have cash in your hand, it will decrease the value over time. On the other hand, when we talk about different types of investments, like investing in the stock market, it also goes down as individuals start selling their shares out of fear.

Protection during market stress

It is not necessarily true, but when the market is under stress, and the economic condition is not looking good enough to sustain, gold prices may increase as everyone preferably invests in gold. The price of gold is positively correlated with the increase in customers' negative expectations, but it is not always true.


There is no shortage of market availability for physical gold. You can buy them from any jeweler. However, it is necessary to ascertain the quality of gold you buy from your jeweler. You must be aware of fraud. You can just go and buy gold either in the form of jewelry or bars. You must keep one thing in your mind when you purchase jewelry. You have to pay to make charges additionally.

Cons of investing in physical gold

Storage problem

Your home is not the best place to keep your physical gold. It will help if you keep your physical gold in banks or any other service that keeps your valuables safe in exchange for an annual charge. It is important to understand the risk of theft will always be a concern for physical gold.

No passive income opportunity

If you are looking forward to having a passive income from your investments, there are better options than investing in gold. Rental income, interest, dividends, etc., are examples of passive income, which is not possible when you invest in physical gold. You will get the value of gold after selling it.

Low resale value in the local market

If you buy pieces of jewelry as an investment, you will get only 90-95% or less of the current market value of your physical gold jeweler. Moreover, only some jewelers will be willing to exchange your gold for money. Isn't it annoying enough? It might save the value of your money, saving you from market stress, but you need to remember that pieces of jewelry will not add value to your asset allocation.

A gold market correction can hurt investors.

Investors, when selling their shares due to panic, have observed that they start to buy gold at premium prices. Investors start buying shares of fundamentally strong companies when the stock market recovers then gold prices go down. Such a panicky decision might hurt the investors.


Gold appears to be a good hedge and safe investment against inflation if you have the knowledge and financial expertise. Whether you are looking to invest in physical gold bars or just starting out investing in general, you should ensure that you understand the risks before you get heavily involved. 

This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.

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Dynamic bond funds

Bond Funds That Play “Duration” For Capital Appreciation

Dynamic, meaning it can change according to your requirements. But, you might be wondering how such a word can apply in the context of investments.

Before understanding Dynamic Bond Funds’, we need to know about Dynamic Mutual Funds.

A dynamic mutual fund is a mutual fund that is dynamic in nature. It means that the fund manager can change the fund’s underlying instruments, such as stocks and bonds, to align with the current and future expectations of the fund. 

The objective of this fund is to deliver optimum returns in falling and rising market cycles. Unlike a regular fund that looks to buy and hold the instruments for the long run, a dynamic fund aims to make the best out of the current market situation.

What are the Dynamic Bond Funds?

Dynamic bond funds are debt mutual funds that invest in debt or fixed-income securities such as government and corporate bonds. These funds are always open to investment and redemption.

The fund managers invest for different lengths of time depending on how they think interest rates will change.

Most of the time, dynamic bond funds are riskier than short- and medium-term bond funds. Still, they have the potential to give better returns in different interest rate scenarios and for long enough periods.

How do Dynamic Bond Funds work?

The Macaulay duration is the average weighted term to maturity of a fixed-income security’s cash flows. Macaulay Duration is, in simple terms, the weighted average number of years an investor must hold a position in a fixed-income instrument until the present value of the cash flows from the fixed income instrument equals the amount paid for the instrument. Macaulay duration is similar to another measure of duration called Modified Duration, often called Duration. Modified Duration is the change in the price of a bond for every 1% change in the interest rate. In other words, Modified Duration measures how sensitive fixed-income security is to changes in interest rates.

Dynamic bond funds can put their money in bonds with different maturities. The duration of a Dynamic Bond will depend on the types of securities the fund manager chooses to buy based on how they think interest rates will change in the future. If the fund manager thinks that interest rates will go down in the future, they will put money into bonds with a longer term (longer duration) to make money from the price going up. If the fund manager thinks that interest rates will go up in the future, they will buy shorter-term bonds to lower the risk of interest rate changes and re-invest the money from the bonds when they mature at higher interest rates.

How do Dynamic Bond Funds help in capital appreciation?

Dynamic asset allocation: Dynamic bond funds can invest in securities with a wide range of investment durations. In contrast to other debt funds, they are not subject to any investing mandates. They are not limited in their ability to invest in either short- or long-term securities. Their dynamic asset allocation also enables them to profit from changes in interest rates. They can buy long-duration securities in the event of lowering interest rates. They may invest in short-term securities in the event of rising interest rates. 

No debt fund requirement: Dynamic funds don’t have to follow an investing mandate like other debt funds. For instance, only short-term securities may be purchased by short-term bond funds. Dynamic bond funds, on the other hand, are not subject to this limitation. They can also make a one-month investment in long-term securities. Interest rate changes are the center of the overall approach.

Advantages: Tax on Long Term Capital Gains(when debt fund remains invested for a period of 36 months or more) is taxed at 20% after allowing indexation benefits, thus leading to a huge reduction in taxable income and saving a large chunk of income tax.

Ideal for: These funds are ideal for investors who don’t want to actively take calls in making a decision based on interest rate movements.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.

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Why Should You Plan for Your Child’s Education?

Why Should You Plan for Your Child’s Education?

Saving and planning for your child's education can be a daunting task for many parents. The level of responsibility and the amount of money that one has to save and invest requires a lot of wisdom and knowledge. This blog will look at the need to have a financial plan for your child's education and some easy steps.

If you think that there is enough time to plan for your children's education, think again. The best and first step you need to follow if you want your child's dreams to become a reality is to invest in their education ASAP.

Don’t trust us? Let us look at the figures.

Let us assume you would like it if your daughter does an MBA from a prestigious college in the US. She is too young to understand, but you want to be prepared.

To help you understand the importance of early investing, let us consider two scenarios. In the first scenario, you invest when she is three years old, and on the other hand, you invest when she is ten years old. If we assume that she might want to pursue an MBA at the age of 21, then considering an inflation rate of 5%, you will need to accumulate Rs.2.41 crore and Rs. 1.71 crore respectively.

However, you will require a monthly SIP of around Rs.31,000 when she is three and almost the double SIP amount if you invest when she is 10 years. This is the power of compounding. The sooner you invest, the better.


Daughter's age



Years left to pursue MBA



Current MBA in USA fees

1 crore

1  crore

Inflation Rate



Amount required

2.41 crore

1.71 crore

Expected return from investments



Total Investment

68.59  lakhs

83.03 lakhs

Monthly SIP




Now that you understand the necessity of child education planning, let us go over some basics that will assist you in deciding about your child's education.

Know how much time you have

Calculate your child's graduation year and post-graduate years. You can determine the time horizon by estimating the number of years.

Figure out the total education cost

The first step is to determine the overall cost of your child's education. This depends on several things, such as whether your child wants to have a global education or prefers to study somewhere closer to home and the discipline that your child likes.

Know where you financially stand

To get a sense of where you are today and how to plan for the future, make a note of all of your assets and liabilities. This can assist you in making better plans. While preparing for your child's education, keep in mind that you should avoid dipping into your investments for other financial goals, particularly your retirement fund.

You should also avoid using funds set aside for your child's education for non-educational purposes, such as house renovations.

Decide how much you need to save/invest

Once you know how much college will cost, you can plan accordingly. Decide how much you need to save right now or how much of a monthly contribution you'll need to meet this goal by the required time.

One simple way is to start a Systematic Investment Plan in a mutual fund and make regular contributions for your child’s education plans.

To make a more significant contribution, you can eliminate unnecessary items from the budget or look for an additional source of income.

Asset allocation and rebalancing

Asset allocation is the breakup of the different assets, such as equities and debt in a portfolio. Proper asset allocation and investing are the smartest way to invest as per the time horizon and risk profile.

You need to make sure that the asset allocation will help to achieve your child's dreams.

If your investment horizon exceeds five years, consider investing in equity funds, which have the potential to deliver higher long-term returns.

Rebalance your investment portfolio gradually towards fixed income or debt as you get closer to your goal.

A well-thought-out asset allocation boosts your portfolio's returns. It can also operate as a shield, protecting your invested amount during times of market volatility.


If you are a parent or plan to raise a child, you shouldn’t delay investing in their education. With the rising education costs and volatility in the job market, quality education has become imperative. So, start planning for your kid's future today and make their dreams a reality.    

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Decision time for the Fed: To pause or not to pause?

All eyes are on the four big upcoming central bank meetings, which kick start this week. While last week’s rate hikes in Australia and Canada increase the possibility that the Federal Reserve might follow suit this week, Kristina Hooper believes the Fed will conditionally pause.

Why conditional pauses

·     Conditional pauses can be powerful tools. They allow central banks to take a breather and give their respective economies time to digest previous rate hikes without being viewed as dovish.

·     A pause can give central banks the time to analyze data and be thoughtful about policy going forward. At the same time, central banks recognize the danger of inflation becoming entrenched.

·     Conditional pauses carry with them the power to reinstitute rate hikes if needed. They send the message that rate hikes may not be over and that central banks are being vigilant about the risks of inflation.


Examples of conditional pauses

·     Last week was a momentous one, as the Reserve Bank of Australia (RBA) and Bank of Canada (BOC) both decided to hike rates after enacting conditional pauses.

·     It made sense that these pauses were conditional given the dramatic number of rate hikes in a relatively brief period of time, but also given very real concerns about the stickiness of services inflation.

·     I found the BOC decision to hike its policy rate to 4.75%, a 22-year high, to be particularly important since Canada has been something of a first mover when it comes to monetary policy.

·     The last CPI print showed higher inflation than expected – Canada’s first monthly increase in 10 months.


The four big upcoming central bank meetings


Central Bank


What do we expect

Federal Reserve

June 13-14

·     Last week’s RBA and BOC hikes were important because central banks’ policy decisions can prove infectious, convincing other central banks to hike rates too.


·     I think this meaningfully increased the odds that the Fed will hike rates this week.


·     But I still believe the Fed will sit on its hands – albeit with some stern language about continuing with hikes if needed (which is being dubbed a “hawkish pause.”)

European Central Bank



Bank of England

June 15



June 22

·     The ECB and BOE are very, very likely to hike and keep signaling at least one further hike for the ECB and probably more for the BOE.


·     Their conditional pauses will likely come later, given that they face higher inflation rates and are further behind the curve than central banks such as the BOC and the Fed.


·     Headline inflation has been falling fast in both the UK and eurozone, but the risk is that core inflation continues to rise in both, particularly the UK.

Bank of Japan

June 16

·     It seems that Governor Kazuo Ueda is not yet worried about inflation. So the BOJ seems likely to stand pat.


·     It seems unlikely it will even tweak its yield curve control policy just yet.

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Debt Mutual Funds vs Bank Fixed Deposits: A Better Option for Low-Risk Investors

Debt Mutual Funds vs Bank Fixed Deposits: A Better Option for Low-Risk Investors

For many investors, fixed deposits (FDs) offered by banks have been a traditional low-risk investment option. However, with the growth of the mutual fund industry, debt mutual funds have become a popular alternative for those seeking stable and reliable returns. In this article, we'll compare the two options to highlight why debt mutual funds may be a better choice for low-risk investors.

Fixed Deposits (FDs)

Fixed deposits are a type of investment in which an investor deposits a lump sum of money for a fixed term, typically ranging from one year to ten years. In return, the bank pays a fixed rate of interest for the term of the deposit.

One of the main benefits of fixed deposits is the stability they offer. The interest rate is guaranteed for the term of the deposit, providing investors with a predictable return. Additionally, FDs are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), providing insurance coverage of up to Rs. 5 lakhs per depositor per bank in the event of bank failure.

However, the stability of fixed deposits comes at a cost. The interest rate offered on FDs is typically lower than other investment options, and the returns are taxed as per the investor's income tax slab.

Debt Mutual Funds

Debt mutual funds invest in fixed-income securities such as government bonds, corporate bonds, and commercial paper. They are considered low-risk investments and offer a good option for those seeking stability in their portfolios.

One of the biggest advantages of debt mutual funds is the potential for higher returns compared to fixed deposits. The interest rate on debt securities fluctuates, which means that debt mutual funds can offer returns that are higher than the interest rate offered by fixed deposits.

Debt mutual funds also offer greater tax efficiency. Long-term Capital gains from debt mutual funds are taxed at 20% with indexation, which can significantly reduce the tax liability compared to fixed deposits, where the interest earned is taxed as per the investor's income tax slab.

Another advantage of debt mutual funds is their flexibility. Unlike fixed deposits, which have a fixed term, debt mutual funds can be redeemed at any time, providing investors with access to their money in an emergency.

While debt mutual funds do come with some degree of risk, the value of the securities in the fund can fluctuate due to fluctuations in the interest rate or changes in credit rating.

Final Thoughts

Debt mutual funds and fixed deposits both have their advantages and disadvantages, but for low-risk investors, debt mutual funds may be a better option. They offer the potential for higher returns and greater tax efficiency, along with the flexibility to redeem the investment at any time.

When deciding between the two options, consider your investment goals, risk tolerance, and financial situation. If you are seeking stability and a predictable return, a fixed deposit may be the right choice. However, if you are willing to accept a slightly higher level of risk for the potential of higher returns and greater tax efficiency, a debt mutual fund may be the better option.

Regardless of which option you choose, it is important to diversify your investments and not put all your eggs in one basket. This will help to minimize your risk and maximize your returns over the long term.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.

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Financial Literacy for Women

Money Matters: Why Financial Literacy is Important for Women

Women have always been in charge of the household finances. Still, in recent years they have taken on more financial responsibility outside the home. Financial literacy is important for women because they need to manage their own finances and understand financial concepts to make sound financial decisions. Unfortunately, women are more likely than men to face poverty after retirement. A big reason for this is that women tend to live longer than men. But another factor is that women earn less over their lifetimes and have fewer opportunities to save for retirement.

But there's good news: Women can catch up by taking courses, reading books or articles, or working with a financial advisor. And the sooner they start, the better. Yet most women are in a huge time crunch, so it s difficult to find an hour or two to learn about money. To ease this issue, we've created a list to help women with financial literacy.

Financial Literacy for Women: Why It is Important

As the world progresses, more and more emphasis is placed on financial literacy. This is true for women, who have historically been at a disadvantage when it comes to money matters.

There are various reasons why financial literacy is crucial for women. For one, women tend to live longer than men, which means they need to be prepared for a longer retirement. Additionally, women are more probable to take time out of the workforce to care for children or elderly family members. Unfortunately, this can make it challenging to save for retirement or build up enough credit to get a loan. Another reason financial literacy is so essential for women is that they are often the ones in charge of household finances. Even when they don't earn as much as their male counterparts, they are typically responsible for managing the budget and paying the bills.

Financial Literacy for Women: How to Get Started

Women are less financially literate than men, and this lack of financial literacy can hurt women throughout their lives. Financial literacy is important for women because it can help them make better decisions about their money, understand their rights and responsibilities when it comes to personal finance, and avoid financial exploitation.

Women can do a few things to start becoming more financially literate. First, they can educate themselves about basic financial concepts like budgeting, saving, and investing. Second, they can seek out resources like books, websites, and articles that provide information about personal finance. And finally, they can talk to someone they trust about money matters to get advice and guidance.

Becoming financially literate doesn’t have to be difficult or time-consuming.

Financial Literacy for Women: Tips for Saving Money

While there are multiple ways to save money, here are a few tips that can help women get started on the path to financial literacy:

1. Know where your money is going:

Track your monthly spending and see where you can cut back. There's no need to deprive yourself, but small changes can make a big difference over time.

2. Define a budget and stick to it:

Determine how much you need to save each month and set up a system that works for you. Whether it is setting aside cash in envelopes or transferring money into a dedicated savings account, make sure you're disciplined about sticking to your plan.

3. Invest in yourself:

Whether pursuing higher education or taking a course, investing in your future is important. Your financial decisions can affect your quality of life and the people around you.

4. Get out of debt:

If you have credit card debt, education loans, or any other type of debt, the sooner you start working to pay it off, the better.

5. Don't forget about your retirement:

The Sooner you start saving for retirement, the better off you'll be when you're no longer working.

Financial literacy is a key skill for women to possess to maintain financial stability. With knowledge of personal finance, women can make informed decisions about spending and saving, which can lead to a bright financial future. Despite the stereotype that math is a man's subject, financial literacy is not gendered; it is something that everyone should learn. When it comes to money, everyone can benefit from being financially literate.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.

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Power of Compounding

Power of Compounding


Investing is a crucial aspect of financial planning, and understanding the power of compounding can significantly impact one's long-term financial well-being. As an individual starts earning their first salary, it is essential to recognize the benefits of putting money into investments early on. This article delves into the significance of starting investments early and highlights the potential opportunity loss associated with delaying one's investment journey.

The concept of compounding

Compounding refers to the ability of an investment to generate earnings not only on the initial amount invested but also on the accumulated interest or returns over time. In simpler terms, it is the snowball effect that occurs when one's investment grows exponentially with each passing year. By reinvesting the returns, the investment grows at an accelerating pace.

Starting early: A wise approach

Leveraging time

One of the most compelling aspects of the power of compounding is the advantage of time. The earlier an individual starts investing, the longer their money has to grow. By allowing their investments to compound over several years, individuals can potentially accumulate significant wealth.

Building a strong financial foundation

Commencing investments from the first salary lays the foundation for a robust financial future. By embracing this proactive approach, one can cultivate a disciplined saving and investment habit, which can yield substantial benefits in the long run. Starting early not only offers a longer investment horizon but also instils financial discipline and responsibility.

Harnessing the potential of returns

Investments, when initiated early, can withstand short-term market volatility and benefit from the potential growth in the long term. By giving their investments ample time to navigate market fluctuations, individuals can harness the potential of compounding returns and significantly boost their overall investment portfolio.

Opportunity loss: The consequence of delaying investment

Missed growth opportunities

Every day that an individual delays their investment journey translates into missed opportunities for growth. Compounding works best when it has a longer runway, and any delay leads to diminished potential returns. By delaying investments, individuals forego the chance to capitalize on the compounding effect, resulting in a substantial opportunity loss.

Difficulty in catching up

The longer one delays investing, the harder it becomes to achieve their desired financial goals. Delaying investment not only leads to a missed period of potential growth but also requires significantly larger contributions in the future to bridge the gap. This can place a considerable burden on individuals and potentially derail their financial plans.

Impact on long-term wealth accumulation

The power of compounding is magnified when investments are made early. By deferring investment decisions, individuals compromise the growth potential of their wealth over time. Even a seemingly small delay can have a substantial impact on one's long-term financial well-being.


Starting investing from the first salary is a key factor in unlocking the power of compounding and creating a solid financial future. By beginning the investment journey early, individuals can leverage time, build a strong financial foundation, and harness the potential of compounded returns. On the contrary, delaying investments leads to missed growth opportunities, difficulty in catching up, and the compromised accumulation of long-term wealth. Understanding the importance of time and the impact of compounding encourages individuals to take proactive steps toward financial independence and security.

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What are Top-up Health Insurance Plans, and how can these be beneficial?

When you order a pizza, the billing executive usually asks whether you need any top-up of cheese, olives, chicken, or other toppings over the basic pizza you ordered. So, these toppings can be compared with the top-ups in the health insurance industry. Every mediclaim policy has a certain sum assured or coverages which one may exhaust, and thus to have better security, top-up plans come in handy at a reasonable cost.

How do top-up insurance plans work?

Suppose you have purchased a mediclaim policy which has a sum assured of Rs. 10 lakhs. However, given the ever-increasing cost of medical treatment and increased risk of chronic illnesses, especially after the pandemic, Rs. 10 lacks can get exhausted within a few days at the hospital. So, in this scenario, you can have two ways out. You can buy another insurance that has a higher sum assured, or you have a top-up plan to increase your sum assured, but the difference would be in the premium.

Top-up insurance comes into play when the primary insurance policy has been exhausted. Suppose you have this Rs. 10 policy and you fell ill with a chronic liver problem, and the bill amounted to Rs. 16 lakhs. Your primary policy will get completely exhausted, and the remaining Rs. 6 lakhs can be paid using the top-up policy.

Often people confuse top-up policies with riders while both are entirely different. Top-up policies are like primary insurance or reimbursement policies, but the difference is in the premium or the cost of having one.

Features of top-up insurance policies

  • As said above, these policies are similar to the primary health insurance plans, so you can also convert them into primary ones.
  • If you have a top-up insurance plan covering both parents, the child can automatically get coverage in the same plan.
  • There is no upper limit or sub-limits on expenses at the hospital like bed charges, doctors’ fees, and others.
  • Many of the top-up plans offer cumulative bonuses on the sum assured for the years where no claims are made, Unlike basic health insurance, top-up plans don’t require you to go for health check-ups. You can avail of these plans based on your basic health insurance policy.
  • The top-ups can be renewed every year without any limit.

Coverages provided by top-up plans

Top-up plans usually cover the following expenses:

  • Pre-hospitalization expenses of 60 days before hospitalization
  • Post-hospitalization cost of 90 days after discharge from the hospital
  • Day-care procedures requiring less than 24 hours of hospitalization
  • Some of the plans also cover the organ donor’s expenses
  • Every hospitalization expense will be covered, from room/ bed charges to doctors’ fees, medications, nurse or attendants’ fees, OT charges, artificial life support machinery costs, implants, and diagnostic procedures as well.

Who should buy top-up health insurance plans?

While anyone can buy these plans, top-ups are more suitable for families with elderly people. As the health risks increase with age, the chances of exhausting basic health plans also increase when there are elderly people. So, having top-up and primary insurance can be beneficial for older adults. Also, if someone has some chronic diseases and requires hospitalization frequently, having a basic health insurance policy of a higher sum assured along with top-up plans can be beneficial.

Advantages of top-up plans

  • Top-up policies can be a savior when you have exhausted your primary policy and still, there are many months before the policy renewal. Suppose you need hospitalization within this duration, and then you can use the top-up plan and not have to worry about the expenses at the hospital.
  • While you can get the same coverage, the premium you will pay for top-ups will be much less than for primary policies.
  • You can also avail of tax benefits under section 80D of the IT Act for the premium you pay for top-up policies.


While general inflation is scaring everyone, medical inflation is at some other level making many families lose their life savings. Thus, having top-up plans to secure your health and finances can be a wise decision to take at this moment.

This blog is purely for educational purposes and not to be treated as personal advice. Insurance is a subject matter of solicitation.

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