Recently I wrote on Reliance Gold Savings Fund – should you invest? I think I invited a storm by writing that. The article received lots of comments with different perspectives. People who shared their views included Financial Advisors, Mutual Fund Employees, day traders & investors. What a day to launch the NFO – 14th Feb (Valentines’ day) creating love in mind of investors 😉
Before taking my shots over the other comments, I am raising two most important questions and my views over them.
Q1. Should you invest in Reliance Gold Savings NFO?
Without keeping any suspense answer is a BIG NO. This not only applies to Reliance Gold Savings NFO, but to all Mutual Fund NFOs. One should never invest in Mutual Fund New Fund Offer for few reasons:
- Saves you from getting in herd mentality. Take the time out and go back to your asset allocation to check if the fund offers you something unique and worth allocating your money.
- Gives you time to analyze that is it right investment for me to achieve my goals. Lot of people will just invest because this is investment in “Gold” lot of will invest just because it is “Reliance” & few other because it is “SIP”.
- May be in first 2-3 months you come across some hidden thing in the product.
- Few more reasons like we don’t know the future of kid when he is just born, sometimes fund charges get reduced after NFO etc.
So my suggestion is don’t invest in Reliance Gold Savings New Fund Offer now as this is an open-ended scheme so you don’t lose anything by not investing now.
Q2. Who should invest in Reliance Gold Savings Fund?
Now I am not talking about NFO I am talking about when this fund will re-open for fresh purchase.
Even after reading my last article people asked me through mail & comments “Advise me on the investment in this scheme.” My answer is it depends – every investment instrument is not good for everyone.
So I am throwing this question to all readers “Who Should Invest in Reliance Gold Savings Fund?” You can analyze yourself & tell whether you should or should not invest in this fund for any particular reason. (Even you can imagine a person & tell he should invest in this scheme or not – if you are a MF advisor it is for you to relate with profile of investor)
Our last article on Reliance Gold Savings Fund also got published in Business Bhaskar. (Click here to read Full article before interpreting anything from title)
You should also keep in mind there are few more investment instruments to put your money in gold than Reliance Gold Saving Fund like:
- Exchange Traded Fund (ETF)
- Coins & Bars
- Golden Harvest Scheme from Tanishq
So here are my views on few of the comments at earlier article on Reliance Gold Saving Fund (first read this) – don’t feel offended just sharing what I feel:
1. Mutual Fund Advisor Said “It’s sure that I am going to log in more than 25 SIP applications of Reliance Gold Saving Fund on opening day itself…..” I don’t think he is doing right to his investors or any of the advisors who is promoting any of the MF New Fund Offer. They should give time to investors to think wise rather than thinking of closing date. The pressure to get into “number game” is indirectly a pressure on the investors, who trust you so much.
2. One AMC guy said “I emphasize appropriate asset allocation to my clients ” Do people really understand what is asset allocation – if YES they will already be having gold in their portfolio & if NO people are using this term to mis-sell Reliance Gold Savings Fund to them.
3. One MF advisor said “gold will touch $1800 in 3 years & also added it will not go below Rs 16000”. Someone wrote “gold prices are going to crash now” who are we do decide gold prices. Let’s understand our limitations as the prive of a commodity is guided by N number of reasons. Do not invest by taking a call on prices, rather invest if you like the asset and feel will enrich your portfolio.
4. Someone said “its not investment, its just saving towards a defined goal to be met in future.” I would like to ask is there any relevance of colour of money? If Next year RBI decide to change green color Rs 500 note to black colour (Oh! this will create problem how we will differentiate which is black money & which is BLACK MONEY. PJ) let’s say blue color will it change something significant. Still it will be able to buy goods or services worth Rs 500 if there is no inflation. If idea is just to save for some particular goal (even if it is of buying jewellery after 15 years) why not invest in instrument which can fetch better returns. That’s the power of money – if our goal is to buy Mercedes after 10 years we don’t keep buying tyres this month & gears next month and keeping them in garage.
5. Someone Said “I was planning to go for 5 micro Sip of 200/- each for different dates in a month (to get the best avg rate/month) and let it continue for 15 years.” Let me ask is SIP only way to invest? Undoubtedly SIP is the best way to invest but again is it the only way to invest? Your parents achieved all their goals without even listening to this term. Coming to his point – You are investing for 15 years and than too caring for monthly volatility. This is a big myth what he is thinking “5 micro Sip of 200/- each for different dates in a month (to get the best avg rate/month)”. In long term this strategy will not be having any impact. This will just create lot of confusions in your bank account & mutual fund statement.
Warren Buffett said “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”
Waiting for your comment & answer on – Who should invest in Reliance Gold Savings Fund?