- Restrict your gold ornaments to the extent required for using immediately on a regular basis only.
- For the rest, and If the expected use is after 10-15 years, accumulate the gold in "paper form", i.e. Gold Exchange Traded Funds/ Fund Of Funds, and liquidate your holdings later at the time of marriage/ other special occasions to buy the required gold ornaments.
- This is because fashions change with time, and if you try to exchange your old ornaments, you may find that your returns have been reduced due to prevailing high making charges, tax implications and impurity issues.
- The advantages of paper gold are: affordability, liquidity, assurance of purity, convenience and safety, pricing transparency, tax efficiency and accountability, and conversion to physical gold.
- As a thumb rule, gold (paper or physical) should be restricted to 5-15% of investment portfolio - after getting your gold ornaments assessed for purity and value to calculate what percentage it forms of your total portfolio.
- The balance investment portfolio should comprise of diversified mutual funds - for revenue and growth - suiting one's own risk appetite, for long-term wealth creation.