Five things NRIs should know about investing in gold

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As we approach the festive season, especially 'Dhanteras,' we look at some important things that NRIs must keep in mind when they buy gold.

One: How much to invest in gold

Gold is considered a store of value and a 'must-have' in your investment portfolio. Gold diversifies your portfolio as well as mitigates risk. If you look at the historical trend, during periods of severe crash of the Sensex, gold has managed to buffer the overall portfolio loss by acting as a 'safe heaven'. For instance, in 2008, while gold grew at 29.18%, the Sensex fell by 54.75%. Now had you invested all your money in the Sensex that year, you would have lost 54.75% of it. But if you had invested 5% in gold and the rest in equities, your total loss would have reduced to 50.55%. Had you invested 25% in gold, your total loss would have been just 33.77%.

However, gold continues to be a non-productive asset and over long periods of time, returns from gold seldom beat returns from productive assets classes like equities. Unless you are an active investor who can spend a lot of time rebalancing your portfolio, experts recommend an exposure of anywhere between 5 to 15% of your total assets in gold.

Two: Importing gold versus buying in India

NRIs can import gold bars, coins and ornaments up to 1 kg during their visit to India. The only pre-condition being that they should have stayed abroad for a period of six months or more. "Since the scheme provides import facility after a stay of six months, an NRI can import gold once in six months. However, short visits to India of 30 days or less are ignored in calculating this period of 6 months," explains Rajesh Dhruva, CEO of femaonline.com.

This import is however subject to import duty. NRIs would need to declare the gold on arrival and pay duty which presently is 4% of notified value in case of gold bars bearing serial number, weight and manufacturer's name and 10% in case of any other kind of gold, including jewellery. The 'notified' value is a value determined by the Government from time to time.

Exception: Men are allowed to bring in duty free gold worth Rs 10,000, for women the limit is Rs 20,000.

Does it make sense for NRIs to import gold from abroad? Amresh Acharya, Director-Investments, World Gold Council explains, "With hallmarking now available at many leading gold outlets, the purity and quality of gold in India is equivalent to that in other parts of the world. However, based upon the priority of the consumer there are two counts on which this choice can be made. Traditional gold jewellery in India is inspired by the country's rich heritage and craftsmanship. Consumers considering purchase of jewellery, especially traditional designs for socio- cultural reasons, will find unparalleled designs and themes in India. In terms of price, the import duty coupled with other local taxes has made gold in India more expensive compared to some other countries. However other costs like making charges etc could be more expensive in countries particularly the US and the UK. So the consumer could be better off buying gold, particularly intricate jewellery, in India."



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Keywords:Dhanteras, NRI, gold,invest in gold, investment portfolio, gold seldom beat,women,Amresh Acharya, Director-Investments, World Gold Council, gold jewellery,craftsmanship. Consumers , local taxes,business news