some money ideas .......

In the latest budget Mr. Chidambaram has allowed gold to be traded through exchanges via Gold denominated bonds/shares. The funda being each unit equal to the value of 1 gm of gold and multiples thereof. This in my view is to reduce the overall import of gold and save us a considerable amount of forex. Since long Indians have been the largest consumers of Gold in the world almost to the tune of 800 tonnes per year. Indians are said to be traditionally interested in the yellow metal as a safety option and safe investment. However every time we buy jewelry made of gold we loose about 5-6% value immediately. Secondly even if we have gold stored as ginnis, biscuits or bars in times of need it is hard to sell/dispose off at market value. Thirdly gold and jewelry is generally bought in cash.

Based on this an idea struck me. Why not have real estate mutual funds. Meaning mutual fund units having particular denominations and completely focused in their approach towards real estate. These funds would collect money from public and invest in land , building and virtual spaces. In the long term for a developing country like India real estate as an asset class will consistently give more returns then equity markets. Just look at the returns for people around you have got from properties invested by them 5-10-15 yrs ago. A compounded rate of return of 30% would not be a novelty .

Some things that might need to be taken care of would be. The valuation and potential of properties being acquired and future business cycles. It is for these reasons that a strong regulation framework with a professional setup would be a good idea.

I have more ideas on it’s execution but would like to save it for a better occasion/platform where I can interact personally . I don’t know if my ideas are pioneering….. , it may be being practiced in the more developed markets . I would definitely like to know more about it if any body has a first hand info about it.

All kinds of comments invited …….