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Procedure: How to Invest in Gold Mutual Fund
February 06 , 2013
  1. Investing in gold mutual funds is a convenient way of including gold in your investment portfolio. Just remember not to let gold to exceed about 10% of your portfolio.
  2. All gold mutual funds are fund of funds in nature. Most of them invest in one of the Gold ETFs. Since gold ETFs track the price of real gold, returns of gold ETFs of different mutual fund houses differ by only a small margin. This means the returns of different gold mutual funds are also expected to be close to each other.
  3. If you already have investments in some mutual fund check returns and expense ratio of the gold mutual fund of the fund house, if they have one. This way you can directly invest online, skipping distributors.
  4. If investing in Systematic Investment Plan, make sure the fund you have chosen allows this option.
  1. Application forms can be downloaded from the fund website. You can also get a physical form at your broker's place.
  2. All you need to complete your application form is to put down your name, date-of-birth, address and bank details. You should also complete details of your investment (cheque number, amount, scheme name).
  3. Make sure you attach a copy of your PAN card in all cases and your KYC verification sheet.
  4. Some people have the habit of having their broker fill the form. This is fine, provided you look through it thoroughly after it is filled. Do not sign blank forms or cheques.
  1. Paying by cheque is the best way to pay for the investment or first instalment. Auto debit or standing instruction can be used for subsequent instalments in case of SIP.
  2. The name to be written on the cheque is typically given in the application form or prospectus.
  1. You can deposit the form in the nearest office of the mutual fund you are investing in if you are a first time investor with that fund house
  2. Alternately, a service centre of CAMS (in case of HDFC, ICICI, SBI, Birla, DSPBR, IDFC, Kotak, TATA, Canara, ING, L&T, Sundaram mutual funds) or Karvy (in case of Reliance, UTI, Axis, Religare, JM mutual funds) can execute your investments and other transactions
  3. You can also hand over forms to your broker. However, in such a case, make sure your application form and cheque are fully filled. Never leave anything for the broker to fill in your absence.
  1. In the website of the mutual fund, or with the broker, you will find transaction slips that allow you to make subsequent transactions in the fund's redemption, switch, bank account change, etc.
  2. In your own interest, you should quote your folio number if making subsequent transactions in a fund. The fewer folios you have, the easier is your portfolio to manage.

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