While making investments, one should research well and inculcate the habit of tracking the performance of the funds at least once a month, advises Certified Financial Planner Gaurav Mashruwala.
For gold ETFs, Mashruwala informs that one should pick up a fund with the least spread. This means the difference between the buying and the selling price should be minimal.
Below is an edited transcript of his interview. Also watch the accompanying video.
Q: I would like to make a fresh investment of Rs 20,000 per month. How should I actually allocate the funds? I have already invested some money in equities but the portfolio value has reduced a lot. I was thinking to switch to mutual funds now or something other than equities. I have some insurance as well.
A: If you are looking at a 10-year horizon, then equity is the asset class to be in. I don’t know when you picked up and how often you have been tracking it. So, if you just picked it up but you are not following the stocks, not reading balance sheets, you are not looking at quarterly reports, then such things happen. To that extent, mutual funds would be a route; but again in mutual funds, there are asset classes. Gold and equity are two asset classes, which are growth oriented, so you need to start investing in it.
One thing is do it systematically. You can do about Rs 15,000 in equity funds. Rs 5,000 should be fine in gold funds. Within equity funds, you can pick up an index fund and a largecap fund - so one is a passive managed fund, while the other is an active managed fund. Then, invest in a gold fund; and keep tracking these at least every month. Go through the NAV, see what the benchmark is, how the performance is. If there is some disturbance or mismatch, keep modifying your portfolio.
There are several gold ETFs listed on National Stock Exchange; what needs to be found out is the gold ETF, which is the least spread. This means the difference between the buying and the selling price is minimal – is the gold ETF that should be bought. The wider the difference, it is bad for investor; the lesser the difference the better it is for the investor.