04 KALEIDOSCOPE ERGO Monday, November 17, 2008

■ Can I reduce the TDS

that my company deducts
GOLD - Jitter or Glitter
from my salary?
The best investment in gold assets should be in the form of gold
Vignesh bullion and exchange traded funds, but not in jewellery
Yes you can. The extent of reduction de-
pends on your actual salary – higher the salary, AMBIGA RAJESHWARI
higher will be the deduction and lesser will be ambiga@finerva.com
the reduction.
The TDS can be reduced by planning your
Section 80C benefits, housing loan, leave travel

allowance, etc, but as salaried people there is
only an extent to which income tax can be re-
duced. Hence, TDS is a pain that we have to
live with.
The positive side of TDS is that there will be
less burden at the end of the year to clear our
tax arrears. And we can always claim additional
tax paid if any with our tax returns.
Mail your queries to finergo@goergo.in. Your
queries will be replied by mail as well as printed
in this column. All the answers will be neutral
and your personal details will be kept confidential
. cities like New Delhi and Mumbai,
■ Term Insurance Plan
This is the most basic and fundamental type
of insurance plan. Under this you pay a premi-
um to the life insurance company to cover your
life for a period of one year for N number of
years where ‘N is the term. After the year is
over, the premium is not valid and you need to
pay for the next year. (It is exactly like your car
insurance, except that it provides cover for
your life)
■ ULIP (Unit linked Insurance
Plan)
In very simple terms it is a combination of a
life insurance policy and a mutual fund. Part of
the amount you pay as premium is used to give
you life cover and part of the premium is used
to invest your money in other investments.
Thus you get the benefit of life cover as well as
wealth creation at one go.
(This column will try to simply personal finance
related jargon)
CROSSWORD
I
ndians simply adore the yellow
metal for cultural and religious
reasons and buy gold jewellery for
most social and family celebra-
tions. The amount of gold in Indian
households is close to 15,000 tonnes,
which is valued at a whopping Rs. 17,
06, 190 crores as of March 31, 2008.
But, this trend is also changing as
most youngsters are not very keen
about buying gold. Today, we don’t
even spend 2 per cent on jewellery as
against 32 per cent 50 years ago. In
surging incomes, changing lifestyles
and introduction of high-end goods
have pushed gold downward on con-
sumers’ lists of must-haves. The dis-
posable income that traditionally
went exclusively to gold is now going
to diamonds, overseas holidays,
fancy car, etc.
India is still the world’s largest con-
sumer of gold, but most of the gold
ends up in bank safes, viewed as a
hedge against inflation and as the
source of a woman’s security.
With expected price shoot up of
gold during the marriage season be-
ginning November, portfolio strate-
gists have begun to advise people to
invest in gold. This view seems strong
enough as most other assets are in
trouble following the global financial
meltdown.
Is it a wise investment?
When we compare the price of gold
with the inflation index, we can see
that gold gives only 0.8 per cent more returns over inflation. Though it has Gold bullion
high liquidity and is easy to procure
and protect, it is not one that will give Good investors consider gold as a
returns. compliment rather than a replace-
Hence, it should be used for what it ment for stock investments. In the
is good at, that is, a hedge against long run, stocks have much higher
inflation. The reason why gold is con- growth potential, but gold can com-
sidered ‘inflation-resistant’ is that plement a diversified portfolio and
the amount of it on the surface is help hedge against some risk. Hav-
pretty much fixed. Since the demand ing gold comprise 10 to 15 per cent
for gold is almost twice the amount of any portfolio would probably be
that is actually mined, the prices for sufficient. The best investment in

gold are likely to go up steadily. gold assets should be in the form of

At present, gold prices are hovering
between Rs.11,000 and Rs.13,000 per
10 grams, giving investors an idea of
easy return between 15 and 30 per
cent in a year. To look at, gold seems
to be a good harbour amidst the ha-
voc of other assets caused by the
global crisis.
For answer turn to page 07
gold bullion and exchange traded
funds and never in jewellery. Gold
can be a saviour from inflation and
recession rather than a high return
opportunity.
■
The author is a Research Associate
with Finerva