Money Bites
Short bites to keep you informed of matters that impact your wallet and wealth
Hey there,
Hope you are doing well!
It was International Women’s Day on the 08th of March and there were some interesting stats bought out by CIBIL- There is a faster growth of women monitoring their credit scores than men. As a correlation, the average credit score for this group is higher at 734 as against 726 for the men who monitor their scores.
The tax saving deadline is fast approaching, hope you have made the necessary tax saver investments.
Top Bite this Week
Is gold losing its glitter? Should you buy it now?
What’s going on here?
Gold prices are down 19% from their all-time high of Rs 55,901.
Why are the gold prices down?
Investors in the financial markets move to safer assets in times of economic uncertainty. This is what happened when Covid hit us. As equity markets around the world crashed and banks offered subdued interest rates, investors flocked to gold and the prices rose.
But, now with vaccinations picking up pace, economies getting back on track, and stock markets reaching newer highs there is no necessity of a safe haven in the form of gold. So, the demand for gold is lower and investments in gold are replaced by equity investments.
Gold price around the world is also affected by the actions of central banks in addition to the demand & supply dynamics. Many of the central banks are allowing borrowings at lower interest rates to boost demand in the economy. This excess liquidity is finding its way towards equity and corporate bond market as against safer assets like gold & govt bonds, now that things are getting normal.
There is another factor that plays its part – the strength of the benchmark currency -The Dollar. As the dollar is getting stronger, more investments are flowing towards the greenback and away from gold.
How does gold price affect your wallet? Should you buy it now?
Lower gold prices are good news for gold lovers that we are. But should you buy it now, is the big question? It depends on how you look at gold. If you are looking at buying gold in form of jewelry for the upcoming festive or the wedding season, it might be the right opportunity. If you are looking at gold from an investment point, it’s always good to have 5-10% of your portfolio in gold as a hedge against volatility.
You Ask – We Answer
How do I choose the right mutual fund for my portfolio? – Asha Talukdar
Any investment is a very personal choice. What suits your friend/colleague may not suit you as your financial goals, risk appetite, and investment time horizon may not be the same as anyone else’s.
To choose a mutual fund or any other investment avenue the first point would be to ask yourself questions- What am I investing for, when would I need the money and how much will I require? While some of your goals may be achievable over 3-5 years (for ex: travel, buying a gadget/car) others may have a longer time frame (retirement/children education, etc). It’s also important to consider your risk appetite. Are you comfortable with the ups and downs of the equity market or do you prefer assured returns which might be lower? Once you have the answers to these questions, you can choose the right category of mutual funds and then proceed to the fund selection within the category.
There are three basic categories of mutual funds based on the assets they invest in. Equity mutual funds investing in equities, debt mutual funds investing in debt, and hybrid which invest in equity & debt in varying proportions. For short-term goals, debt mutual funds could be suitable, for medium-term goals, you could try balanced mutual funds and invest in equity mutual funds for long-term goals.
? Do you have questions on personal finance & investing? Go ahead and ask away in the comments below. Get featured in our upcoming issues.
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