SGBs that will give returns of the Gold Rate plus the 2.5 percentage interest with no capital tax gain at the end of the eight years OR Gold ETFs which will give the benefit of COMPOUNDING and safe Liquidity, even though taxable (12.5 percentage).
If someone is investing for a long term, which would be a better choice?
Thank you for your response. I just self educated myself.
So will compounding with SIPs into a Gold Mutual Fund give a CAGR of 12 to 15 percentage thereby possibly beating SGB at the end of ten years?
For example: Mr. A started a SIP of Rs. 6000 per month into a Gold Mutual Fund (with good tenure record of risk adjusted returns, Sharpe ratio, low volatility etc.) He contained the SIP, sometimes with step up too.
Mr. B who is more old school decided to buy one gram (roughly 6000 rupees) each month as SGB, and he continued the same.
Who will have a better returns at end of ten years is what I am wondering. I have a hunch that Mr. A might beat Mr. B due to the power of COMPOUNDING...the XIRR should beat I feel. But I am not sure. I cannot find any reference materials or information regarding the same. It's been pricking me for few weeks
Thanks!
Not in a rush as I discovered the Gold Mine! I was just wondering why this content is not being discussed anywhere, surprisingly not even by the so called Fin-influencers. Hence I thought like my thought process might be wrong or I might be thinking in the wrong direction, or I am missing something.
I agree with the points you have raised, that is the market risks and unpredictability of Mutual Funds viz a viz SGBs - completely agree. But to my surprise there are two or three Funds in India which has an annualized CAGR of 12 or 13 percentage which is as good as the SGBs is what I understood - of course what's been the past performance need not be same for the future. That said, isn't the Gold Mutual Funds unaffected by the market fluctuations as much as usual Equity Funds as the Gold Funds are only linked to the price of the Commodity Gold? I thought it is so to a Large Extent.
The earlier said Funds (which performed well) has a good track record, good risk adjusted returns, good Sharpe ratio, good alpha and beta too.
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