savings account interest rates set to raise - stock market investment strategies

RBI today deregulated interest rates. this is set to trigger a competition among bank to spice up the interest rates in order to attract money into their banks. This is going to be beneficial to the end user regarded more as the RBI's diwali gift.

Is this going to have an effect on the stock market? If the banks provide guaranteed income to the investor then who would like to invest in more riskier investments like stocks. Gold which used to provide a safer investment also looks very volatile since its now traded like other stocks. So this move is customer friendly and is sure to have an impact on the stock market, but need to keep a close watch on how much will it impact.

Banks have started increasing interest rates for savings bank deposits. Banks that have relatively low savings deposits are luring the customers to open savings account in their banks. Banks that have more savings deposits are not expected to hike the interest rates unless large  number of people start moving out of their banks. Surely this is going to help the customers, however the affect may be slow.

stock market investment strategies - invest in gold - an in depth analysis

Is it a good time to invest in Gold?

Gold has seen a huge upside in the last couple of years. Is it sustainable?

Well, the answer for this is not predictable. This is due to the recent listing of gold in stock markets. Now-a-days Gold is being traded so heavily in the stock market that the volatility that usually is associated with stocks is now seen in the rates of Gold.

However, Gold being a metal is seen as much safer option than stocks, since many believe that the value of natural resources cannot come down too much. There may be volatility but the price of gold crashing down like stocks is surely not expected.

If you see the normal trend, whenever the stocks go down then the gold prices go up. This is due to the fact that if stock is not reliable, people feel it better to invest in safer resources like gold. However, I feel this model is not going to last long. If ever there is a slowdown then the purchasing power of people also go down, so the price of gold will come down along with it. People who have gold at the time of slowdown also would like to demand money in exchange of gold contributing to the decrease in the price.

According to me, the role of Gold in your portfolio can be max of 20%. What is your opinion?

stock market investment strategies - e-gold and e-silver from NESL

If you are looking at investing in Gold or Silver then e-gold and e-silver offerred through NESL is a good opition.

In India, Gold is also traded in the form of Gold ETF's. However, in the case of silver ETF's are still not introduced. So you can look at investing in e-gold or e-silver.

Advantages:

• Investing in metals is a safer option as it is not affected by inflation
• Better than ETF's since the maintainence charges, vault charges etc are lesser.
• Option to convert to physical gold.

Disadvantages: 

• Need to open a new account for trading in e-gold, e-silver or e-copper.
• Doesnt have a long history, so procedures are yet to finetuned. You cannot convert to physical form in all cities etc. Information about this at the broking houses are also limited.

Related posts:

Best Gold ETF in India

Gold investment options

India's best Gold ETF - Stock market investment strategies

Investing in Gold is the safest option because the price of gold is always increasing. whether it is a slowdown or the stock market is booming the prices are always going to go up. There is no better place than India for investing in Gold. This is because the consumption of Gold is almost 25% in India of the total consumption thorough out the world. According to the recent estimates if there is no new gold mine found then with the current comsumption all the Gold would have been extracted in another 9 years time. This makes investment in Gold a very good option.

With the government in India plunging into a minority it can be easily seen why Gold reached all new heights? With the festival season coming up Gold can be expected to scale new heights in the coming months. So why wait, grab a part of the Gold pie today.

Here is the list of Gold ETF's present in the market

Gold benchmark exchange fund (GoldBees)
UTI gold fund (Goldshare)
Quantam gold fund
SBI gold fund
Kotak gold fund
Reliance Gold ETF

Almost all of these are available in the form of ETF's (exchange traded funds). i.e. you can invest in these as if these were normal shares. So if you have a demat account you can invest in these shares.

The next question that comes to mind is which one of these shares is the best to invest in when there are so many options. Lets analyse these shares and then decide on the best ETF.

First lets look at the volumes. This is an indicator of the stability of the stock. The volumes of GoldBees is almost 60% of the total gold shares in India. The main reason for this is GoldBees was the first gold ETF to be ever introduced in India. It was recently acquired by Goldman Sachs.

The other criteria to consider is the expenses that is incurred in the maintenance of the Gold ETF. If you check this also Gold bees scores above the rest. Gold bees maintenance cost is 1% while the close second is Quantum gold ETF with 1.25%. This eats into the profits so this also should be considered while selecting a Gold ETF.

Leaving all the statistics aside, finally what matters is the difference in the performance of Gold ETF over a period of time. If you look at this as well the performance of GoldBees is the best followed by kotak gold ETF.

Another factor to look at is the price of units. This differs for each ETF although all are based on the price of Gold. All ETF is approximately the price of 1gm of Gold except Quantum gold ETF which is half gm of gold. This may not make much difference but for small investors this may be useful information.

Overall GoldBees by far looks the best Gold ETF at present. Kotak, Quantam and SBI look promising. What is your opinion. Any other factors that you would like to discuss while choosing Gold ETF's?

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Types of investment in Gold

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Stock Market Investment Strategies - Gold ETF (equity traded funds) vs Gold mutual funds vs Gold commodities- Metals investments options

Is it a good time to invest in Gold. Any time is a good time because this is a metal. The value of the Metals are only going to increase with time and never decrease. This is because it is very rare that a new gold mine etc are discovered which can bring the value down. With many satellites and technology to determine the inside of earth crust the chances of a new mine getting discovered is almost impossible. With increasing extracting costs and along with the new demand (whenever there is a slowdown in any part of the world) the prices of gold are bound to increase. So investing in Gold is the right thing to do. After gold if you want to invest the next option is to invest in silver. Every day a new gold ETF or mutual fund is being announced, even this increases the demand for metal. At the current consumption rate of Gold it is expected that the current resources of Gold will get extinct in another 8-9 years, unless you hear of a huge gold mine being discovered.

There are different ways if you want to invest in Gold or metals in general. Two smarter options are Gold ETF and Gold mutual funds. Ofcourse, you have the traditional way of investing in Gold. The problem with that is you need to safeguard the gold in possession yourself.

Lets look at these two options of investing in Gold / metals and which one is more advantageous for you.

Gold ETF: equity traded funds are just like shares / equities. You need to have a demat account to trade in these shares. This comes with transaction charges and demat charges. If you are interested in short term trading then this is the one for you. Since these are equities you need to buy Gold ETF's in multiples of units.

Gold Mutual funds: For having the gold mutual funds you need not have an associated demat account. You can invest in these funds using a systematic investment plan that protects you from ups and downs of the volatile market. On a long term this might be a better bet. However, this is associated with entry load and exit load. There are like mutual funds so you can invest any amount. In India however there doesn't exist any mutual fund that can directly invest in physical Gold. Instead invests in Gold ETF. Hence the performance of Mutual funds will be slightly lesser than that of corresponding ETF's since it incurs mutual fund maintenance costs as well. So in India, Gold ETF's are surely a better option compared to Gold Mutual funds.

These are options you get for investing in Gold. There are other ETF's similar to gold ETF. They are silver ETF, copper ETF, Lead, zinc etc.

In the recent times Siver ETF's have outperformed Gold ETF's. However, in India Silver ETF's are yet to make it to the market since there are laws which doesn't allow it to enter India. So investing in Silver through commodities would be a better bet.

Commodities: There is also the option of investing in these metals including gold through commodities. If you invest in commodities then you have the option of converting it into the physical form as well at a nominal charge. Even this comes with the advantage that you need not safeguard it yourself yet can be converted to physical form. This option is not available either in metal ETF's or metal mutual funds.

National spot exchange is an exchange where you can trade in metals. This stock exchange deals specifically with trading in metals. Presently it allows trading in Gold, Silver, Copper and Zinc.

Egold: another option to invest in gold is to invest in e-gold. Similar to NSE and BSE for stocks there exists National Spot Exchange to invest in E-Gold and other metals like silver, copper etc. However, it doesnt have long history and not many customers are used to it.

Related Posts:

Best Gold ETF's in India

e-gold and e-silver

Real estate investment

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Stock Market Investment Strategies - Most awaited IPO's of the year 2011

2010 has been the year for the IPO's, they were making good money in the short term. The biggest of them all being Coal India IPO. There was a lot of money flowing into the Indian stock market even though in other market people preferred to play the waiting game.

Now moving into the year 2011 lets look at the list of Most awaited IPO's:

Micromax - Micromax is planning to go public with the launch of its IPO this year. The success story of micromax with its low end phones is a miracle of sorts. The company was not even heard of before 2 years but now it has taken the 2nd position in the overall sales of the mobiles in India next only to Nokia. Its IPO is very eagerly awaited.

Jindal Power

L&T Finance Holdings Ltd

Reliance Infratel


Delhi Metro Rail Corp


Reliance Life


The LOOT


Which IPO are going to go for.

Did I miss anything? let me know...