The Indian consumer’s obsession with gold is very well known, and Akshya Tritiya heightens that frenzy. The traditional reasons for buying gold have been mostly to do with creating an asset that has a high level of liquidity. It is still easy to pawn gold and realise money across the country, even in the smallest of villages. After gold bars became available with banks, many buyers have shown an interest in pure solid gold. That banks do not buy back the bars still remains a limitation, though.

The appreciation in gold prices in the past three years has created interest in gold as a pure investment option. There is wide recognition that jewellery shopping can be segregated from investment in gold. The availability of gold exchange traded funds (ETFs), which are now listed and traded on the National Stock Exchange (NSE), provide the opportunity to several who like to invest in gold. Without the bother of holding physical gold.

Gold ETF units are available as units that represent the value of 1 gram of gold. The net asset value (NAV) will move in line with the price of gold. If one has a demat account, one can accumulate all the gold he wants to buy using this simple tool. The surge in volumes around Akshya Tritiya indicates the choice investors are making in buying paper over solid gold. Those moms who accumulate gold for their daughters can now buy ETFs every month, and sell them in one lot when the need to buy solid gold for the wedding arises.

Easy succession
Claiming the deposits and investments left behind by a deceased must rank as one of the most harrowing experiences faced by families, even as they come to terms with their grief. A simple nomination in accounts and investments goes a long way in making the process easy. In a recent judgment, the Allahabad High Court observed: “It will be most appropriate that the Reserve Bank of India issues guidelines to the effect that no savings account or fixed deposit in single name be accepted unless the name of the nominee is given by depositors.”

An RBI circular, issued earlier this month, only persuades banks to ask for nominations, but doesn’t make it mandatory. The circular, in fact, clarifies that an account-opening request should not be turned away for refusal to provide nomination, but only record this fact with the papers. It is then left to the wisdom of individuals to fill up that nomination form.

It is a simple form that takes a minute to fill, but makes it possible for the nominee to claim the proceeds of the investments and deposits with great ease. Considering that most of us don’t have a registered will or even a detailed account of our investments for our family to fall back on, the nomination is the least we can do. Without waiting for the RBI to make it mandatory.

An NRI asks…
An NRI reader, Anil Pandey, has settled in the US and married a foreigner. He wants to know if he can invest in mutual funds and in small savings schemes like RBI bonds in India, in his name, as well as in the name of his wife and children. He also wants to know why some mutual funds don’t accept investments from NRIs in the US. To answer…

First, Pandey and his family will be eligible to invest as persons of Indian origin (PIOs), and will therefore be eligible to invest in mutual funds. Second, small saving schemes and RBI Bonds are not available to NRIs for investing. Third, if the mutual fund is sponsored by an entity registered in the US, it cannot offer its products to US citizens without regulatory approvals. Therefore, some funds in India that are , sponsored and managed by US companies exclude NRIs in the US from being eligible to invest in them.

Exit options
The issue of reinvestment option in an ELSS fund has been a bugbear for many investors, as the reinvested units are also subject to the three-year lock in. Several funds have removed the reinvestment option in ELSS, and several have changed the default option from reinvestment. To provide relief for investors who have been historically stuck, funds are now willing to change the option from dividend reinvestment to dividend payout. This technically does not amount to a switch from one option to another. In a scheme with lock-in, switches cannot be made. Those investors who are stuck with dividend reinvestment in ELSS might want to effect this change in option.

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