Personal Loan for buying Gold - advisable?

Dear ILites,

Is it advisable to take personal loan (@ 10.5% interest) from ICICI for a 4 year tenure and invest the sum in Gold Coins offered by the same bank?. The minimum loan amount they are offering is Rs. 140000, for which the monthly EMI is coming to Rs. 4000+. The Interest I shall be paying on Rs. 140000 would be around Rs. 59000/- for 48 months.

Which is best as an investment option - Gold Bars or Gold Certificates.

I have asked the Bank to give me a week's time to decide, your suggestions would be of great help to me.

Tanmayi.

Dear Tanmayi,

If you are buying gold as an investment, then please dont go for it. Banks charge you a premium for the gold coins/bars they sell. Their price will be more than the pure gold coins sold by jewellery stores. Reason: They give purity certificates.

But if you want to sell it back, you will have to sell it for a much lower price than the current market price. No jewellery store or bank will be willing to purchase it from you even if you quote Rs.200 less than the current market price (my own experience). One proof of that is the very bank which is selling you the gold, ICICI in your case, will not buy it back from you.

If you are buying gold for ornaments, then it is your personal decision. Hope this helps