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Investment In Gold And Small Schemes Are Proving To Be A Loss-making Deal

In this entire year so far, investors have made losses from almost all sources. Be it the stock market to gold investments or the government’s small savings schemes, all have given little benefit in comparison to inflation. The surprise is that the interest rates of small schemes remain unchanged even after the inflation rate continues to remain above 7 percent, the Reserve Bank of India (RBI) has increased the interest rates by 1.40 percent three times.

It is believed that the government will increase the interest rates of small schemes marginally, but it will be much less compared to the level of interest rates and inflation, because the interest rates of these schemes are stable since June 2020. Talking about the stock market, the Sensex was definitely up in January, but it closed at 58,568 in March. On Friday also it closed at 58,840. That is, investors have not got many benefits in this too. However, during this period, after the aggressive increase in the repo rate by the RBI, the banks did increase the deposits marginally, but it is still very low in comparison to inflation.

loss in gold

Gold prices have come down drastically in recent times. In January this year, the price of gold was Rs 49,100 per ten grams. Even at this time, it is marginally higher than this. That is, if someone has invested in gold, then even in eight months, he has not got any benefit. When the war between Russia and Ukraine started in February, people invested heavily in this instrument considered safe at that time. Due to this, its prices once crossed Rs 53,000. But this week, the US Federal Bank is again in favor of increasing interest rates.

US, UK, Japan, and India are likely to increase rates simultaneously

Along with the US, the Bank of Japan, India, and Bank of England will also review their monetary policy, in which rates are expected to rise. Due to this, there has been a huge fall in the price of gold. Gold prices have gone to the level of the year 2020 at this time. Its price had fallen 2.4 percent last week. This is the fourth week in five weeks when gold prices have seen a fall.

7.40 percent interest on small schemes

Small schemes included in the Sukanya Samriddhi Yojana, fixed deposits, and recurring deposits are getting a maximum interest of 7.40 percent. During the minimum, it is at 4 percent. The highest is on Sukanya Yojana which is 7.40 percent. The interest rate on the 10-year bond is above 7 percent from April 2022. Its average from June to August has been 7.31 percent. In such a situation, in view of this, the government can take a decision to increase the interest rates.

This is how the interest rates of small schemes are decided

The government has a different rule for fixing small interest rates. According to a press release issued by the Finance Ministry on March 28, 2016, the interest rate on PPF should be 0.25% higher than the average 3-month interest rate of government securities. On this basis, if this 0.25 percent is added with 7.31, then this time 7.56 percent interest should be given on PPF. At present, 7.1 percent interest is available.

Sukanya Samriddhi should get 8.3% interest

The interest in Sukanya Samriddhi is currently 7.6 percent which should be 8.3 percent. According to the rules of the government, after an average of three months, 0.75 percent more interest should be paid on this. Thus the interest after 7.6 and 0.75 should be 8.3 percent. However, the government does not implement this rule immediately.

trust the stock market

The stock market gives good returns to the investors in the long run and it has this history too. In such a situation, investors should rely on the stock market at this time. Slight volatility is possible, but in the long run, it can yield more than double-digit gains. – Kishor Ostwal, CMD, CNI Research

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