Gold Monetization Scheme: Here's How You Can Earn Interest on Your Gold in India

The government on Tuesday released the draft guidelines for its ambitious gold monetization scheme that aims to cut down gold imports in the country. The guidelines have been notified nearly three months after the scheme was announced by Finance Minister Arun Jaitley in the Union Budget.

Here's how the gold mobilization scheme is likely to work according to the draft guidelines:

1) The scheme is meant to mobilize gold held by domestic households and institutions. Gold collected through the scheme will be made available to jewelers for manufacturing of new jewellery and other items.

2) The scheme will initially be launched at a few places because the government will have to first set-up infrastructure for facilitating easy and secure handling of gold.

3) Gold collected from consumers will first be cleaned and measured at test centres; it would then be melted to test for purity. After the tests, consumers can either deposit the gold for a fee or take it back after paying a nominal fee.

4) The minimum quantity of gold that a customer can bring is proposed to be set at 30 grams.

5) Those willing to deposit the gold will be given a certificate mentioning the amount and purity of the deposited gold. Banks will open a 'Gold Savings Account' on the basis of such certificates.

6) Consumers will be paid interest on their gold savings account after 30/60 days of account opening. The amount of interest rate to be given is proposed to be left to the banks to decide.

7) Both principal and interest will be paid to the depositors of gold, will be 'valued' in gold. For example if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms.

8) The customer will have the option of redemption either in cash or in gold, which will have to be exercised in the beginning itself (that is, at the time of making the deposit).

9) The tenure of the deposit will be minimum 1 year and in multiples of one year. Like a fixed deposit, breaking of locking period will be allowed.

10) Gold savings account will be exempt from capital gains tax, wealth tax and income tax.

According to the government, gold deposit accounts will utilise the 20,000 tonnes available within the country and help in cutting down the 800-1,000 tonnes of gold the country ships every year. The last day for submitting feedback on draft guidelines with the finance ministry is June 2.

8 Clever Ways To Raise Money For Your New Startup

Raising money for your new startup isn’t as difficult as you may think.
However getting the right source of funding is slightly more complex. Each source of capital has its own unique advantages and disadvantages.

Here are 8 of the most reliable sources when it comes to raising money for your startup.

8 Ways To Raise Capital For Your Startup

1 – Crowd funding

While crowdfunding is still in its infancy as a means of raising money for your startup its popularity is rapidly increasing. Crowd funding takes it name from the fact that your project is funded by the public using their own personal funds. To start with, you propose the idea that you wish to see funded. People can then choose how much or how little they want to give you. Most crowdfunding sitescurrently use a reward base model where people who invest in a new business venture are given some form of reward such as the product that is going to be produced. However changes to US law will soon allow equity based crowdfunding.

Some of the best crowdfunding websites for small businesses include Kickstarter, Indiegogo, and Fundable.

2 – Angel Investing

After entrepreneurs have made their fortune many of them look to invest their funds back into startup businesses. These are known as angel investors. Some of the worlds largest businesses including Google, Facebook, Skype and Twitterhave received angel investing.

The benefits of receiving angel investment go beyond the purely financial. The advice and connections that a good angel investor can offer can be equally as valuable. Angel investors are willing to take on the risk of a brand new startup. There are a number of angel investing networks which connect entrepreneurs and investors. Some of the biggest networks include Golden Seeds, Tech Coast Angels and Investors Circle.

3 – Family and Friends

Your family and friends want to see you succeed and may even want a stake in your potential goldmine for themselves. However using family and friends as a source of raising money can be problematic. It can create a strain that can ruin personal relationships. It is also worth remembering that over 50% of small businesses fail in their first five years often because of factors completely outside of the control of the owners. Make sure that you are not borrowing money that they can’t afford to lose. Put any lending agreement in writing with the terms clearly laid out even if it is a “friendly” loan.

A number of successful businesses have started out with a loan from friends and family, so don’t shoot this idea down, just be mindful about the pitfalls and burdens that may come about in turbulent times. The risk is high but so is the reward when you are able to grow not only your own wealth but friends and families along the way.

4 – Credit Cards

Credit cards should be viewed as a temporary measure between getting your business started and obtaining other financing such as a bank loan. Given the hefty 10 – 20% plus interest rates on many credit cards they are generally not a good source of loan term capital. That said credit cards have been used by many entrepreneurs when their was no other options available. In the mid 1990s the founders of Google initially funded the company using credit cards. While the founders maxed out their credit cards they used the funds wisely, purchasing second-hand computers instead of new ones and open source software instead of off the shelf.

5 – Bank Financing

One of the most common ways that people raise capital for their small business is through a bank loan. Your banker may request that you have your loan guaranteed by the Small Business Association before approval. The SBA is a government agency who will guarantee up to 80% of the value of the loan for applicants which meet their criteria. Alternatively you may be able to offer some other form of security such as your home to get your loan approved.

6 – Second Mortgage

Second mortgages are also referred to as home equity lines of credit. These loans tap into the locked up equity you may have in your home. To calculate how much you may be able to borrow for a second mortgage take the value of your home and deduct the value of any outstanding mortgage. Be aware some lenders may only lend only up to 70 – 80% of the fair value of the home. One of the biggest advantages of using a second mortgage is that the interest rate tends to be lower than with others form of financing. This is because the bank knows it can always recover the value of the loan by foreclosing on your property if you are not able to meet your interest payments.

7 – Venture Capital

Venture capitalists aim to invest in early stage businesses with high growth potential. Traditionally venture capitalists received equity in the business in exchange for funding it. However these days they typically demand a mixture of equity and debt financing.

The venture capital business is based on the idea of a few big wins making up for a lot of poor performers. In fact approximately 3 out of 4 businesses which receive venture capital fail. Because of this venture capitalists look for businesses which have a lot of growth potential. If the market for your business is more modest you may need to look elsewhere for funding.

8 – Business Partner

You might not have the money to get your business started but maybe you know someone who does. Of the Inc top 500 businesses, 28% received seed funding from a co-founder.

When selecting a partner for your business you need to make sure that their own goals for the business are aligned with yours. As a business partner they will have control over the direction of the business. It is also a good idea to have a buy out agreement in place in case of a breakdown in the business relationship. This should stipulate that the other partner must agree to a proposed buyout within a set time frame or buyout the other partner themselves.

Finally it is worthwhile looking at the lesson of Facebook. CEO and founder Mark Zuckerberg had seen how earlier dot com companies had been willing to give away almost all of their equity to venture capitalists in order to get funded. He wasn’t going to make the same mistake and never gave up equity lightly. His 28.1% stake is now worth $14.9 billion. Be careful to negotiate your own financing terms with equal tenacity even when all you have is a vision for the future. The difference may one day be worth millions.

6 Guy Kawasaki Lessons About Pitching Your Startup To An Investor

Guy Kawasaki is a Silicon Valley venture capitalist, bestselling author, and Apple Fellow. He was one of the Apple employees originally responsible for marketing the Macintosh in 1984.

“You say: “I have lots of great ideas, but I have trouble figuring out which one to try. Let me tell you about a couple.” Investor thinks: “I want to know which idea you’re going to kill yourself trying to make successful, not which ideas have crossed your idle mind.”” – Guy Kawasaki

“Here’s what you should say [to investor]: “This is what my company does…” It’s that simple. What you’re trying to do is get potential investors to fantasize about how your product or service will make a boatload of money. They can’t fantasize if they don’t know what you do.” – Guy Kawasaki

“You say: “I love to think of new ways to solve problems.” Investor thinks: “Is this a high-school science fair?””- Guy Kawasaki

“You say: “My goal is to build a world-class company.” Investor thinks: “How about you ship and sell the first copy before we talk about world-class anything?”” – Guy Kawasaki

“You say: “I don’t know much about your firm, but I thought I’d contact you anyway.” Investor thinks: “You’re a lazy idiot–why are you wasting my time?”” – Guy Kawasaki

“You say: “The last time I contacted you, I…” Investor thinks: “I’m going to fire my secretary for putting this clown on my calendar again.”” – Guy Kawasaki

How Do I Know If I Should Take A Job At A Startup?

Imagine if someone asked “would you invest in this company?” Your answer is going to be similar. With a few additions.

Here’s the checklist I would follow:

A) Has the CEO built a business before?

This is not always reliable (Mark Zuckerberg or Larry Page hadn’t built businesses before) but there’s an interesting stat: 85 percent of startups fail. If the CEO has built and sold a startup before, then the odds go down to 25 percent. So you might as well have the statistics on your side.

B) Does the company have good funding?

By good funding I mean two things:

Enough money to last at least a year. And, by the way, this is an important thing to note: if the company has six months or fewer worth of funding then they are already out of business. Which is why “A” above is so important. Good CEOs know this.

“Good funding” means people (or funds) who will also write second checks. If all they have is one year’s worth of friends and family money, then you are taking the risk in a year they will run out of money. Why take risks when there are plenty of other good jobs out there?

And, I’ll throw in a bonus third thing on this: it shows they are the type of company/CEO who can raise money, sell his vision, etc.

C) Do you believe in the vision?

This can mean several things.

The CEO is creative enough to develop a strong vision and he’s also a good enough communicator to convey that vision.

You would use the product (if the product was applicable to you).

You can’t use the product but you can easily see how this product can help a million or more people.

I’ll give a good example and a bad example.

Good example: Tesla. You would work for Tesla if you believe in Elon Musk’s vision of reduced need on fossil fuels, or if you want to drive a Tesla, or if you think everyone driving an electronic car (and having a powerwall) will help a million or more people.

Bad example: someone pitched me an idea where consumers can pick the type of ads they see. I do NOT see how this would really help a million or more people. So I would not work for a company like that (and, by the way, they had a lot of investors).

I invested in a startup recently that developed a technology for vaping vitamins and medical drugs. I use the product (I vape B12 with it, Vitamin D with it, and trans-reservatrol). And I can easily see how this can help a million or more people (the entire U.S. is Vitamin D deficient and people’s bodies are unable to digest vitamin pills.

D) Valuation

You’re presumably getting options at a startup and, depending on the value you contribute, those options will increase.

How do you know if their latest round valuation is good?

Forget for a second the money they raised (we dealt with that above).

But imagine you had, in cash, the amount of their full valuation. Would you be able to create a better product with more traction? Like, for $46 billion, would you be able to beat Uber? Unclear to me. But there are plenty of startups out there where if you gave me their full valuation in cash I can easily see how they can be replaced.

Don’t work for a company that is easily replaceable at a lower valuation.

Also, if you believe in the valuation, make sure your options are not at the venture capital price but at the “409A valuation” price. Google that.

E) Learning

There’s a great story about Sergey Brin interviewing people. He can usually tell in the first few minutes if he’s not going to hire someone.

So then he spends the rest of the interview making sure he learns at least one thing from the interviewee.

Make sure that even in the worst case scenario where you misjudged everything else, that you at least learn one thing fairly quickly after you take the job so that it adds to your skill set and you can move on to get a better job.

I took a job once at HBO (not a startup but still) where I learned so much in a three-year period I was able to take the skills (ranging from technology to entertainment to TV production) and leave and start a successful company.

F) Subtleties

I visit a lot of companies per year for various reasons. I always look for the subtleties.

How do the partners get along? The entire culture of a company comes from the top down. So if the partners who started the business don’t have their emotional act together, the company itself won’t be emotionally sound. One company I was about to invest in was a co-CEO situation. I heard one of the CEOs gossiping about the other. I didn’t invest.

How do the employees talk about the clients? Read the biography of the founder of JetBlue. He would stay up to 3 in the morning every night responding to customer service emails. Once a month he would ride on one of the longer plane rides and starting at the back of the plane and moving to the front he would sit with every passenger and ask them if they had any problems with the flight. He actually hired employees that way. That’s the CEO but everyone in the company should have that attitude toward customers.

A year ago I visited a law firm where they were trashing their customers and making jokes about them. That’s not the sort of company I would hire, work for, invest in, etc. A company and it’s customers are one eco-system. Not “us vs them.”

Your boss and his/her boss. A lot of bosses make hiring decisions based on “would you ride in a cross-country airplane next to this guy.” You should make your decision the same way about your potential bosses. Believe me – they need you more than you need them. So you have to like them.

Also, think ecosystem again – try to see their relationships with other people in the company. All gossiping is bad. Hopefully they think highly of the people they work with. Else you shouldn’t work for them and you shouldn’t work for that company.

G) Demographic Trends.

Warren Buffett is not a value investor. Everyone thinks he is but he hasn’t done real value investing since the early 1960s.

Warren Buffett is a demographic investor. Two quotes from Buffett:

“If a company is going to be here 20 years from now then it is probably a good stock to buy.” and

“If you have a strong demographic wind behind you then the company will do well even with poor management.”

For example, the book Bold lists a lot of demographic trends that take advantage of Moore’s Law that are getting bigger. Robotics, Internet of Things, 3D printing, etc. That’s one start. Another start are companies disrupting healthcare since that is such a mess right now.

Another example: I’d rather work for Uber than a company that lends money against taxi medallions. I’d rather work for Airbnb than Marriott. I’d rather work for Tesla than GM.

H) Light At the End of the Tunnel

You can’t ask in your interview, “when will you IPO?”

It’s unpredictable when a company will exit. A good company might wait 7-10 years before an exit. In fact, a good company should wait 7-10 years. Why? Because if they’re good then they are undoubtedly growing faster than the market. So they should stay private as long as possible to maximize benefits for shareholders and employees.

But here’s the problem: The average employee stays at a startup for 3.1 years (perhaps that corresponds to vesting schedules, I don’t know).

Make sure you can wait for that 7-10 year run. Also, I’d try to figure out if management is ultimately interested in an exit. Some CEOs are not.

I) Eventual Profits

Make sure you see the path to profitability. Some startups might be years away. But the good thing about working for a company that ultimately has huge margins (not just profits but margins) is that they have a lot of perks.

Just compare the chef at Google with the chef at Walmart. Hint: there IS NO chef at Walmart.

– – –

This seems like a big checklist before you decide to work for a startup. But don’t forget that YOU are the valuable person here. Take care of all of your needs and then you will have more freedom. Be able to demonstrate greater competence at your job, and have better relationships with the people you work with.

In other words, you’ll be happy. And that’s a nice reason to take a job.