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  • Investment from money with Gold Loan.

    Interested in investing money obtained from getting a loan on gold ornaments? Searching for details of whether iti s profitalbe to go ahead with this proposition? Find advice from experts here.

    Every family have some Gold ornaments and generally they kept it in the locker with Bank year after year, also bear cost of locker rent without any return from their Gold. Many of them does not even use that one where as some uses this in occasionally. But there are many companies which are Granting loan by keeping the Gold in their possession at a reduced interest rate. Hence, the general people can take this opportunity and earn a handsome income from this.
    Now is it profitable to utilise this amount for investment purpose to earn money keeping in view the total security aspect. Please share your knowledge about this including details of rules and regulation regarding this.
  • Answers

    7 Answers found.
  • It is very easy to get loan against the gold and many banks are wooing the customers with this offer. Whenever we go to a bank we see some displays mentioning it. Some people are actually going for these loans when they require some money urgently and then later they repay it when their revenue from other expected sources starts pouring in. Now the question arises who should go for this loan and how to find that the investment made by that will be a profitable proposition. Today the return on investment is going down in many investment areas due to competition as well as the economic scenario. There are some avenues like private company deposits and share market but they are riskier propositions.

    One thing which still holds is business where the return on investment can be better if it is in a niche area and its product and services have a demand in the market. If one can establish a business and have good sales then the profits can be generated which are enough to repay the loan taken by depositing gold with the banks. Let us see some areas where there are growth potentials in todays environment.

    Many people are going for buying the products in home delivery mode and it makes sense to try to become a reseller for an online agency. If the product is good and timely delivery is assured then the reseller will slowly make a good reputation and the online store will send him increasing number of orders for many merchandise items and the profit will also increase. This will require some quality assurance and good return policy of the item that many of the online stores are adhering to.

    Another business which has a potential today is the home delivery of meals and food items as many people are ordering food from outside to cope up with their busy schedule especially where both the persons (husband and wife) are working. A good tiffin service has a good scope in the present environment.

    I see a good future in tutoring and tuition area as most of the students are being sent for it as the competition for making a career is becoming tougher day by day. One can explore feasibility of opening a tuition centre or work as an individual in this domain as it has good potential for earning.

    There is yet another domain where there is potential but it has to be evaluated and addressed in a planned way before launching a service. Today there are many people who want that the person from an agency should come and take the documents from them and do all the ground work and send it to the concerned office or company or bank whatever the case may be and the customer wants the final product just by sitting in his house. There are a plethora of such jobs related to Aadhar card, PAN, Driving License, Income Tax, GST, Passport, VISA, Certifications from various Govt as well as private agencies, and other miscellaneous documentation work. If done in a ordered ay this is going to be a potential area.

    Knowledge is power.

  • What I understood from your question is the amount taken on the Gold loan is to be invested in some area. Which area is better for that.
    There are two ways for it. One is to save the same money in some other area where you will get more interest and the difference in the interest is your profit. For this what is the interest you are paying for the gold loan is to be known.
    There are some advanced balance funds in Mutual funds. HDFC balanced advanced fund is one such fund. The rate of interest you will get will be around 12% based on the time of purchase. This is one safe option where you will have security and safety for your investment. You can contact and talk to concerned HDFC MF person and enquire about it.
    Another option is to invest that amount in the real estate business. Purchase some property and resell it when you want to get your gold back. It is also a safe business if you take all precautions while purchasing the property and check all the papers properly, get the lawyer opinion before purchasing. So once you invest in this, the value will be increasing and the return will be definitely more than what interest you are paying on your loan.
    You can keep in FD in private companies or share market, but they are risky. Sometimes you may lose the money also. So you should be careful while doing this.
    Another option is to start a business with that money. But the main problem in business is that from day 1, you will not get the profits. You have to start the business and get established in the market and withstand the competition. This will take some time and then onwards you will get profits. If you want the Gold back you have to pay the full amount but you can't get back your complete investment so easily whenever you want. There are many profitable businesses. Trading business is another activity which is good these days. You have to purchase and resell the items. There are two ways. You will keep stocks with you and then start marketing the product. Another way is getting a quote and then try for order and get the material after getting an order only.
    The business you have to select will be decided based on the area you stay and the requirements around.

    always confident

  • Dear Author and who ever will read this article, first of all always remember never ever investment should be done with the money got by loan.
    When you took loan you are bound to pay the interest amount.
    Gold loan is easily available by banks or NBFC as it is liquid things and easy to dispose if you wont be able to repay the loan amount on time.
    There are many attractive interest advertisement given by many banks and NBFC but it comes around 1.5 % per month so annually it will become around 18% or more.
    when you planning to invest you cant assure you are going to get 18% return but you are bound to pay the interest to banks.
    You can plan for any business or for any emergency to take gold loan , but keep in mind that you should earn more than 18% annually from that business after spending all expenses then only you are safe or else your gold will be sold by bank.

    Only surplus money should use for investment or trading so that you can afford to loose.
    N.B- I am not saying all investment or trading money goes to loss but you should mentally prepare what to do next if you loose the money.

  • Taking a gold loan is actually a very simple process. The lender evaluates the value of the gold items the customer holds and examines the documents. The lender then approves the loan amount according to the market value of gold. You can take back the pledged goods by paying the principal amount along with interest.

    Approved in a very short time - The gold loan process is more simple and quicker than other loan processes. Because its documentation process is less complicated.
    Credit history is not required - in general, when you apply for a loan, your borrowing history is also seen, but this is the case in gold loans.
    Income certificate is not required - receipts related to the purchase of your gold are required in a gold loan, not your income proof.
    There is no extra charge for early repayment - even if you complete your loan before the stipulated time, you do not have to pay additional fees, as in other normal loans.
    Gold remains safe - Its biggest advantage is that you are also safe in Gold Bank and do not give you any amount.

  • In India Gold has a sentimental value apart from its ornamental value, especially with women. Gold, in India is considered a family heritage, status symbol, auspicious sentiment and an emergency provision. Until recently Gold was not at all considered as an investment asset, but as a heritage and status giving wealth.
    Families did not like to sell off gold, but would prefer to gift or transfer and pass on to other members of the family as gift or inheritance. When some emergency financial need arises, they used to pledge it for short time and retrieve it as early as possible. That is why Gold Loan is still a popular lending product in banks in India. Many private lenders too, lend money against pledge of Gold.
    In recent times the trend is reduction in interest rates, both for deposits and loans. Moreover a new awareness has come that money is to be rolled over or turned over and not to be kept idle.
    New trend is to make money work more. So they raise money from various sources and employ it to work more and return more.
    The above question is thus very relevant in this context.
    The proposition is good with some 'ifs 'and 'but' s.
    Te deal will be beneficial if the net return from the new investment is well more than the interest on the gold loan. The investment should also be liquid to withdraw as and when needed. This is because Gold loan are mostly given for short terms. So you have to invest the amount in such a way that the amount comes back before the due date of Gold loan. Then you can close or renew the gold loan.
    You may have to bear in mind certain points in this regard. Banks or lenders do not give gold loan for the full market value of the gold. They give only a certain percentage like 70 or 80 percent of the current gold market value. So you have to make a good profit in the new investment with that to service the interest on gold loan as well as retrieving it by due date.
    Moreover the return or capital appreciation of new investments should be more than the capital appreciation (market value increase) of Gold. Then only this investment will be beneficial and prudent. By considering all these points and taking all prudent cautions and monitoring, you can try investment of money raised by taking gold loan.

  • If you are interested to get a loan against your gold reserve from any nationalised bank, the process involved in such a process is not cumbersome and the only vital thing in this connection is the production of photocopy of original receipt of such possessions to the authorities of the banks. The other terms and conditions of the banks would be quite friendly to avail of the loans. However, they may offer you a loan for a shorter duration and the extent of loan would not exceed beyond 80 percent of the prevailing market price of this metal.
    Considering your need to divert the money in some useful business offering you lucrative profits within a short time should be your prime objective and you may concentrate on the following areas to multiply your earnings of your money availed as gold loan -
    1) Purchase a car of low cost such as Tata Indica and get it registered with the Uber.
    Considering the down payment of the car, cost of diesel per month, monthly payment of the driver and the maintenance of car per month, your earnings would be huge if you could deploy at three cars in such a business. Net profit would be around 50,000/- per month.
    2) On line teaching- This would be highly profitable business if you could manage a team of experts of science subjects such as Physics, Chemistry and Mathematics offering guidance to the aspirants preparing for the competitive examination. The initial phase may not be promising but with your consistent approach the profit would be amazing. Ensure that your teachers are dedicated and sincere to improve upon the performance of the aspirants. Your popularity and earnings would prove to highly satisfying within a short interval.
    3) Instal a business of water purification- The initial cost of investment would be around Rs 25,000/- but the profit of margin would be comfortable with the pickup of demands and your efforts.
    4) Super Food Farming- You should concentrate on the variants such as Brocolli, Dragonfruit, Avacado etc as being the ultimate products for your super farming and in the starting phase, the initial investment would be roughly 1.5 lakh. Moreover, you would get government support in the form of tax relief. This business would be ultimately prove to highly profitable with your consistent effort.
    5) Be an Import/ Export trader - You could aspire to be an Import/ Export trader after getting your company registered along with GSTN with a fee as low as Rs 2500/- and procure the IEC code. After registration from India Mart and other traders, reach out the customers and start selling your products with the handsome margins.
    There are other profitable business as well and if interested you can even look into such areas, but still you may like the points as suggested by me.
    The profit earned within a year would be enough to repay your loan taken from the bank but the business you started with your own efforts would pay you lucrative return consistently in the years to come.

  • Taking loan against gold is one of the simplest loan given to any person by any bank or private firm. Loan against gold ensure the security of the money of the lender given to the you . Lender generally give about 50-70% of the value of the ornaments and interest rate also varies from 9-15% as per different criteria.
    My personal advice is to invest the amount received from this loan in any business that you would currently doing or wiling to do in future. Some of the good business option are like online teaching classes, invest in shares and stocks but with some knowledge, e-commerce business and many others
    According to the reports gold itself give very good return yearly from last 3-4 years of about 20-30 % annually and according to the experts it will double itself in less than next 5 years with annual return of about 20%.
    Gold loan is a tool which will help you in harsh time but it is not for taking loan for no use because if you earn some it is not enough according to time invested.

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