Tuesday, January 18, 2011

5 Reasons Why Gold Loan is Considered A Smarter Choice

Quick processing time

                  The gold loan requires very minimal documentation, so the processing time taken by banks or other financial institution is very small. Normally it will be sanctioned in one or two hours. Some banks even offer to give loans in a very few minutes. Normally the only document you may require is an address proof

Lower interest rates  (around 5-8%cheaper than the personal loan)

                      The interest rates charged for a gold loan is lower when compared to personal loans (around 5-8% cheaper). So it is better to use your asset to work for reducing the interest rate burden.

No usage restrictions

                       Unlike loans such as housing loan, car loan or agricultural loans there are no usage restrictions for the amount you borrow using a gold loan. You can use it for any of your needs.

Emotional attachment may ensure timely payment

                        Most families in India have an emotional attachment to gold. So this might make you morally responsible to repay the loan so that you can get back the gold pledged for a loan.

Acts as a security locker for your jewelry

                         Keeping gold in houses comes with a risk as thieves are always on a lookout to steal gold. If the gold is pledged for a loan, it will act as a secure locker for you. The bank will be ensuring their lockers which they are keeping the gold. So you are sure that you will not lose the value of your gold asset kept as collateral.

Please share your comments below.

Monday, January 3, 2011

Reasons to Love or Hate Mutual Funds

Mutual Fund investments are one of the main investment options of a retail / normal investor. Like any other investment product this have it's own pros and cons. Here we are trying to come up with a list of key points to love or hate mutual funds.

Reasons to Love Mutual Funds
  1. Well regulated
    1. Mutual funds in India are regulated by SEBI.  This forces the mutual fund company's to be transparent to people. That's why they disclose the offer document which consists of the fees details, entry and exit load details as well as the style and risk of investments.
  2. Liquidity
    1. Mutual funds are typically liquid investments unless a pre specified lock in period is mentioned. Usually funds take a couple of days to refund the money, once we liquidate the investments. As they always is linked with a banking account, usually it will be credited directly to your bank account, or else it will be an account payee check.
  3. Ease of Process
    1. If a citizen have a bank account and PAN number you can start investing in Mutual funds. Only thing is fill the form and issue a cheque for your investment.
  4.  Asset Management cost is low
    1. The cost of asset management is low as they are dealing with  a very large pool of money. The charges comes around 1 to 2 % per year for equity investments. Previously there were entry loads for mutual funds which are removed by SEBI now.
Reasons to Hate Mutual Funds
  1. Non convincing management
    1. When compared different mutual fund managers, not every one is above average. Some are comparable only to a non professional who charges fees for his lossy work  So one need to study their fund manager before choosing a fund.
  2. You dont have any control
    1. Unlike you picking your stocks, you are becoming a passenger of an investment bus. Your only option is to just sit and decide when to jump out of it. The speed and stops of the bus will be decided by the fund manager.
  3. Hidden Costs
    1. They will appear to be zero entry load investments. But in reality they charge you for every transaction they do plus the fund management charges. The sales man tend to not make it clear to the clients. And this will be hidden deep in the offer document which normal clients tend to skip reading.
Please do share your comments.