How to Invest in Gold | Sovereign Gold Bonds (SGB) vs Digital Gold vs Gold ETF vs Gold Mutual Fund
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- Опубліковано 22 лип 2024
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Are you looking to invest in gold but don't know where to start? In this video, I'll cover 5 different options for investing in gold in India: Sovereign Gold Bonds (SGB), Digital Gold, Gold ETF, Gold Mutual Fund and Physical Gold. I'll be discussing the pros and cons of each option in a comparison format as we look at how each of these gold instruments measure on the basis of its availability, risk, returns, costs, minimum requirement, liquidity and taxation. This information will act like the ultimate gold investment guide to you which'll help you make an informed decision about how to invest in gold irrespective of whether you are a beginner or an experienced investor
The 5 gold investment options I have covered in this video includes:
1. Sovereign Gold Bonds (SGB) are government securities denominated in grams of gold and its value is pegged to the price of gold in the domestic Indian market. SGBs are rather popular in India as they come with low risk and offer an interest of 2.5% per annum which none of the other gold products offer
2. Digital Gold is an easy and convenient way to buy and sell gold online. It offers 99.9% purity of gold and can be bought from many financial apps. The big risk with digital gold (or e-gold as it is sometimes called) is that it lacks regulatory oversight (RBI and SEBI don't regulate digital gold currently)
3. Gold ETFs are exchange-traded funds that invest in physical gold and can be bought from your trading account. These can be bought during trading hours and carry an expense ratio of 0.5 to 0.7%
4. Gold Mutual Funds are professionally managed funds that invest in various gold-related assets, primarily gold ETFs
5. Physical Gold is the traditional form of holding gold which includes jewellery, coins, bars, bullion etc. Indian households own a lot of physical gold and it is estimated that they hold over 25,000 tons of gold which is about 12% of all the gold that has been mined since the start of mankind
👉 Video Chapters:
00:00 Gold Gold Everywhere
00:56 Benefits of Investing in Gold
03:09 1. Availability of Gold
04:14 2. Risks in Gold Investment Products
05:59 3. Minimum Investment for Gold
06:51 4. Gold Returns and Costs
07:34 Expenses in Digital Gold
08:51 Gold Mutual Fund Expense Ratio
11:21 5. Liquidity of Gold Instruments
13:13 6. Tax on Gold Investments
15:20 Shankar's Viewpoint
👉 Resources and Reading Material:
‣ This tweet thread by BasuNivesh says gold taxation on premature redemption is tax-free: BasuNivesh/status... (please consult a tax advisor)
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Disclaimer: I am not a SEBI registered investment advisor or research analyst. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented
9:36 ah! What a golden revelation for me! Was wondering why I should go for gold etf when gold mutual funds have lower expense ratio. But this makes it clear! Thank you.
Most welcome! 🙌
Thank Shankar sir explain big confusion about gold in easy and simple manner with more clarity.
Glad you found it useful. Thanks for the appreciation
Many many thanks for in detail covering all aspects of "GOLD" as investments tools... liked the last one where conclusion is critical...
Most welcome. Glad you found it useful.
Thank you again for sharing detailed analysis. I did something similar couple of years ago and went with option of ICICIGOLD ETF. Watching it come up on your video reassures my decision. Thank you!
Most welcome!
Thank you Mr. Nath for another informative video! The depth, comprehensiveness and lucidity of your videos make them very helpful especially for the new learners. Keep up the good work!😊
Thank you very much for your kind appreciation and encouragement. I'm glad you are finding the videos useful and relevant
Golden advice, golden words & very informative! Thanks for sharing this in-depth video! Keep them coming!
Thank you very much, Ravi. Glad you found it useful and informative
I am sharing this on my family group where elders keep asking me for sgb vs other modes.... thanks!
Most welcome
Very well explained got many of my doubts cleared Thank you
You are welcome 🤗
Immaculate and comprehensive as always... ❤
Glad you think so!
Again , Premium content .
This show's you have done good homework for the vedio. Keep it up.
Thanks a ton
Thanks for an insightful video,much appreciated. 🙏
Most welcome, glad you liked it
I was amazed when I watched your video on gold investments, it was explained in depth, thanks
Thank you Ashok ji. Glad you found it useful
I am a long term investor, kindly advise on good investments 🙏
Golden way to explain Gold investment 🎉
Glad you liked it
Very well explanation and snippets about the gold investment. Kudos to Shankar Nath.
Thank you very much 🙌
Golden information shankar Nath😊
Glad you liked it, Baskar. Thanks!
Golden information shared by golden people only like as you 🎉
Thank you very much 🙌
Excellent analysis sirji 🙏🏾. Good start by laying the plot with historical facts & figures.
Glad you liked it
We've never thought about expense ratio of etf as underlying asset in gold mutual fund. Very useful information. We prefer gold mutual fund option due to liquidity advantage at convenience and completed asset allocation before 31st March 2023 to ensure indexation benefits. In future it's better to use dynamic asset allocation mutual fund due to taxation advantages...
Glad it was helpful!
This video is pure gold. 😉
I've not invested much in gold but this year I plan to do so.
Imo the returns of SGB look attractive but its moderate liquidity is a concern. Everyone likes it because of govt backing but that is the risk too. We never know when the govt will tinker with the 2.5% additional interest when it feels like just like it plays around with PPF interest rates.
By the looks of it a Gold ETF is better with physical backing of gold and high liquidity.
Thanks
1. I agree, there will be some changes to the form & shape of SGB. It need not be in terms of interest only, the government can also change taxation and it will at some point of time because the no capital gain tax is unfair to gold ETFs/MFs which can go upto 30% tax
2. In my view, short term tactical gold plays are better served with gold ETFs and long term strategic allocations can be done via SGBs
@@shankarnath Agree point 2 many thanks
@@shankarnath If at all Govt of the day in the future decided to tax the capital gains, would it be retrospective or for the upcoming issues?
@@venkatesh4715 I'm sure this clarification will also come from the government
Very useful information. Appreciate your efforts as always.
Thank you very much
Wonderful presentation. God bless. You are real gem.❤
Thank you! 🙌
This is what exactly I was looking for 🎉🎉 thanks for all info
Glad it was helpful!
Very Informative... Thank you Mr.Sankar Nath
Most welcome, glad you liked it
I personally invest 10% of my SIP amount into edelweiss gold and silver fund of fund. Gives me exposure to 5% of gold and silver each in the entire portfolio. Every quarter the fund rebalances the ETFs held to be 50:50, this also helps in capturing the change in gold-silver ratio. At the time of rebalancing, if gold is overvalued compared to silver, profits will be booked from the gold side and get invested in silver without having to realise capital gains and vice versa for silver. It has already given me 7.8% return over the last 2 months. If asset rebalancing is something one does, then fund like this will help.
Thanks for sharing your strategy and views, Suhas
Really nice appreciable content as always ❤
Thank you very much, Parag. Much appreciated
Thank you shankar I have subscribed your channel couple of days back ... and i have covered almost 75% of your videos. I am gonna share to my family surely you need better reach and subscriptions .Keep going 🎉
Thank you Ashok ji. Glad you found it useful
Wow! Your content never fails to impress 😊
Thank you! Glad you liked it
Hello Shankar sor I had been waiting for this video for long
Good to know. Hope you find it useful
Golden and all gold 🪙 information received thank you Shankar sir ji ❤❤
So nice of you. Thanks!
Your videos are as awesome as GOLD, thank you!
Thank you
Hi Shankarji, thanks for a crystal clear and a goldmine video on gold as an investment. Could you please suggest some Gold ETFs as a part of a 20 year long term portfolio? I’m yet to invest in gold. Just bought 1 tranche of SGB back in 2020 but later didn’t buy due to lack of liquidity (uncertainty of staying invested in 8 long years in case of an emergency). Any suggestions on good gold ETFs would be highly solicited. Thank you again Shankarji. 🙏
Great video, Shankar nath
Thank you very much!
I want to invest some amount of my portfolio in HDFC GOLD DIRECT MF(10%of my portfolio)and rest of equity and fd... Will this good for me in future??
Well explained. Keep sharing your knowledge. Rgds
My pleasure
Excellent content sir. Lots of information..
Glad you found it useful
Great Going keep up the good work
Thanks 🙌
wow...very good information. Thanks a lot for your effort
You are most welcome 🙌
found another gem of a channel, your content delivery is neat & clean
I appreciate that!
Well Presented sir . Good work !
Thanks a ton
So nice of you sir, very informative
Glad you liked it Pawan ji
Doubt for Taxation on SGB in secondary market.
Hum ye to jante hai ki SGB open hone ke time pe purchase kar ke maturity tak hold hone pe capital gain tax nahi hai. But if hum SGB ko secondry market se purchase krke maturity tak hold krte hai to uska bhi capital gain tax nahi lagega ya lagega?
Since USD is the reserve currency, does a 10% gold allocation help for folks investing in USD as well?
I am not only learning Financial from Shankar Sir, but as IT professional ,how to present the data in professional and concise way
Glad to hear that!
Excellent Shankar👍
Thanks!
Very nice explanation sir...Tks a lot...
You're most welcome
Best video. But one question if i hold 2 years should i get 2 years 2.5 interest?
You can get SGBs in the secondary market for 3-7℅ discount. If we are sure of holding it till maturity, we can use this as a good discount
How can you get SGB in discount than issue price?
Shankar Nath Sir... please provide financial management /retirement strategy for Unmarried and people without children..i believe the financial needs of this group is different...big fan of you..keep up the great work sir.
Thanks for the suggestion
Superb content as always
Thank you so much
Definitely an analysis class apart from others.❤. Please clarify if the maturity proceeds are directly credited to the buyer in case of SGB or any specific process is to be followed. Regards
Thank you. Yes, the FAQs say so. Pls refer to point 22
m.rbi.org.in/scripts/FAQView.aspx?Id=109
I'm just a beginner and investing in gold. Should I do it and grams and coins? Don't have much money question?
Great information!!!!
Thank you!
Please make a video explaining how to exactly purchase sgb’s as most is them doing know how to!
Thanks for the suggestion
Could you please make a video on how to build wealth , right from emergency fund to retirement planning, for varied incomes, like if I were to earn 50k per month, how should I go about my savings, investments and expenses. This will b really helpful. Thank you!
Thanks for the suggestion
Awesome video.
Thank you very much, Cmdr. Unercat, glad you liked it
Namaskar Sir, randomly came to your channel yesterday and found a gem 😊. Sir one request if this channel is almost dedicated to Indian people, may I ask you to make videos in English and Hindi as well. Many people will get benefit. It's a humble suggestion.
Namaste Priti ji. Thank you very much for your appreciation. You raise a valid point as have many people and I've realised the decisions I have to make are no different than anyone, you & me included make on a daily basis at work, at one's house, in relationships etc. We evaluate the scenario, come up with solution and pick the one that is systemically viable. Please allow me to explain my thought process
The English-v-Hindi decision was required given my own physical & mental abilities. My videos require a lot of research, scripting and editing which takes up all 7 days of my week to produce 2 videos. To avoid stress, I take a small 3 day break after every 6-7 videos. If I were to look at English and Hindi - then the quantity of videos will come down, maybe 1.5 videos a week or worse, the quality of research will come down. It is also possible that UA-cam might start penalizing me for being infrequent or posting duplicate content which means patrons like you might not discover me.
Effectively, as a full-time content creator, there are three people I need to take care of in equal measure:
1. Me (priorities: adequate videos, revenue, mental & physical fatigue)
2. Viewers (priorities: quality video production, well-researched content)
3. UA-cam (priorities: number of videos, CTR, average view time)
At this point, I feel I have balanced the priorities of all three stakeholders to the best of my abilities. Any modification will either require trade-offs or I'll have to introduce additional variables like hire people, change video format etc. I'm certainly looking at different aspects of it and over the comings months, you'll see much of that in action.
Once again, thank you for your note.
Great information 😊
Thank you!
Appreciate the thorough research Shankar and a great video as always.
As you showed the possible reverse correlation between Equity Market and Gold. I was wondering what will be a good metric to understand when the market is inflated or conversly gold is fairly priced to find out a good time to invest in gold(possibly via secondary market SGBs)?
Thank you very much for your kind appreciation.
Two points here:
1. There is something called the Gold-to-Dow-Jones-ratio I've read about which can be used to measure the movement of gold vs stock markets. Specifics can be found here: www.goldavenue.com/en/blog/newsletter-precious-metals-spotlight/what-can-we-learn-from-the-dow-to-gold-ratio
2. With re: SGB, more than the macro understanding of gold, you can see if this is available at a discount in the secondary market using a website like sgbanalyzer.com/home
Hope this helps
Very useful video sir, thank you!
Kindly make a video how expense ratio is calculated with an example. TIA.
Thank you for the suggestion
Excellent video
Thank you!
Great video 🎉
Thank you Shabeer
Very good information
So nice of you. Thank you!
Thank you Shankar sir for this video. If possible can you please make a video on filing ITR using ITR-1 and ITR-2
Most welcome and thanks for the suggestion. I'm not adept at taxes so it will be an out-of-place, out-of-sorts experience for me. Very sorry
No worries sir.
Gold is not an investment but an insurance against the system/government so I would prefer physical gold which I can touch and hold having zero counterparty risk.
Great insights on gold. I only invest in SGB, enjoy gold price growth, tax free and 2.5% interest, supported by government. I availed loan when needed. Blocking money for 8 years, so you would not loose for sometime unnecessary expenses. What else you need in life?
Great to know and thanks for sharing your experience
@@shankarnath Do you provide personal financial advice? Then, please share your contact information else recommend a financial advisor. Thanks 😊
@@oldschool472 I am working on a paid consultation model as many are asking for it. I'll release it on a pilot basis sometime next month (May)
Which is better etf or mutual fund
perfect information
Thanks!
Planning to get married in 4 years.. So for buying jewellery should i go for equity MF investment or these options of gold investment!? Please let me know sir.. 🙏🙏
Very good video. Please make a video on the most cost-efficient ways to convert physical gold and jewelries into SGB in demat form or certificates. TIA.
Thanks for the suggestion
Super info sir ..
Thanks and welcome
Awesome analysis
Thank you!
Thanks for the information video.
You have partially clarified my doubt regarding taxation on sgb
Kindly make a video on which broker is better to open a demat account in minors name
Most welcome & thanks for the suggestion
Hi Shankar, Thanks for making this video! You mentioned that Gold MF expense ratio should be considered in addition to the expense ratio of the linked Gold ETF but why is the ER shown as 0.1% only for such MFs in all the trading portals?
Most welcome. That's because the MF scheme is not bound to report the underlying asset's expense ratio. The same construct works in most international funds also. I should mention here that a few AMCs mention the underlying asset's expense ratio in their fund factsheet as a side entry.
very good video, thanks
You are welcome!
Thank you, Sir, but also make a video on silver.
Thanks for the suggestion
Perfect video.. and at the perfect time for me..
I recently looked into Gold and Silver ETF FOFs (Motilal Oswal and Edelweiss). As they invest in Siver and Gold ETF seperately, the Expense ratio is a bit on the higher side (around 1.05 and 1.2)..
Is it a good option to invest in one of this funds?
Apologies, I haven't analysed this Gold and Silver fund so don't have a view on this. I'm certain the fund houses would have published some presentation in their website, maybe you can make up your mind after viewing that.
Great video! My question - What should an investor do (after 8 years) post SGB maturity if Government discontinue SGB scheme.. then How do you suggest to hold more than 20 years, Gold ETF or SGB ?
Thanks. Upon maturity of SGB, you can reinvest the proceeds in:
a) another new tranche (if RBI makes it available)
b) invest in an existing tranche via the secondary market
c) look beyond SGBs and invest in other options like Gold ETFs
Good evening, if I purchase SGB from secondary market then what should be it's maturity time - 8 years or balance years.
Balance/residual time
Sir please make a video about how to buy SGB s at discount in secondary market and benefit
Thanks for the suggestion
Hello Shankar
Thank you so much for putting such high quality content , I really appreciate the way you cover every topic , keep it coming
I had a question about a financial decision that has to be taken with regards to loans , let’s say we have a equity and debt mix portfolio and we have accumulated at cagr 10% over 10 years , if we have to buy a house / car how do we decide if we proceed with taking a loan or diluting the portfolio to buy house and then start building the portfolio
If we end up selling our portfolio we have to start from zero and we kill the concept of CAGR , how do we approach such situations
Thank you Anirudh. Personally, I distinguish between trade-offable goals and cant-be-avoided goals. If a car or home comes under cant-be-avoided, I simply go for it as it is the need of the hour. Coming to your query, I would have pushed out the debt part first to finance the purchase to the extent possible .. and for the rest of the balance I would have gone with a loan. The reasons for this are:
1. Especially if its a house, the overhanging theme is that I have replaced debt with real estate in my portfolio
2. Generally, we prepay loans so as my savings increases & I figure out more ways to making money, I will be able to foreclose the loan part in maybe half the time. So within 6-7 years, I will be debt-free with a house and with my equity portfolio intact as it was earlier.
Hello Shankar thank you so much for the explanation!!
wonderful content really worth it for the research and innovative thinking
Thank you so much!
Thank you 👍🏾
Most welcome
Thank You Sirji!
🙌
very helpful video
Glad it was helpful!
Instead of Gold, can we consider investing in Gold Miners and similar upstream (if that's the right term) listed companies that may profit from a rise in prices and pay dividents too?
Similarly, other linked precious metals (Platinum, Palladium etc) miners can be considered?
Can you please research and give your advice & suggestions on this.
Thanks for the suggestion. If I find something on this, I'll circle back. Personally I have never tracked it this way because I use gold as a diversifier. Therefore, by converting gold into a stock (mining company), conceptually I will be adding risk to my portfolio which is not sound asset allocation & risk management.
How will election affect sgb?
Thank you so much for such informative video sir...
I have got two queries
1. Can I hold SGB for more than 8 years
2. What'll be the redemption process after 8 year..will the redemption amount will be automatically credited in the account like FD
Most welcome
1. No. Maturity is 8 years
2. Yes, the proceeds go into the bank account. Please read more about redemption process (point 22) at m.rbi.org.in/scripts/FAQView.aspx?Id=109
You did a related video on silver with ET money. How about a refreshed one o'er here Mr. Nath?
Thanks for the suggestion, I'll look into it
Thanks for the informative video Shankar 🙏🏽 When I lookup for SGB on zerodha I see different prices for each tranche/series. I'm confused! Do we just buy the cheapest? Shouldn't the rates reflect the current gold price, hence all be equal? 🤔 Is there any advantage of buying older/newer series from a maturity standpoint?
Most welcome. I'll explain it differently. Say, you hold two bonds. Bond X's interest will be paid out next week and Bond Y's interest will be paid out next year. Will you offer me the two bonds at the same price? Probably not! So the yield is one of the elements that determines the price of an SGB at a particular point of time. Other than that, there is always the demand/supply, the tenure of the SGB, the taxability for the bond holder etc. that determine the pricing of a bond.
@@shankarnath Thanks for the explaination, that makes sense.
Thank you sir❤️
Recently I started looking into international mutual funds for selecting the right one for my portfolio. Surprisingly that was that most tedious task i came across after a long time!
Even various nasdaq 100 fofs are showing different returns over 1 year period, actively managed international funds are holding different stocks from what they have mentioned in their names, expense ratio mismatches and so on....
Could you please share your thoughts or create a video in investing into international mutual funds?
Hello Noel. Presently, there are restrictions when it comes to investing in international MFs and ETFs. Once these restrictions are removed, I'll have a video.
@@shankarnath Thank you!! So should I wait until these restrictions get lifted or should i invest in existing international funds?
DSP World Gold Fund is another way to play the gold theme.
I would raise caution here. The DSP World Gold Fund's underlying asset is the Black Rock Global Funds - World Gold Fund. This Black Rock product invests in mining companies and therefore tracks the share price of the mining companies and not the price of gold. Case in point is what happened an year back. In April 2022, the DSP World Gold Fund fell by 30% over the next 6 months (because global stock markets fell by 30%) .. but the price of gold was pretty stable and fell by 3 or 4%. So if you held the DSP World Gold Fund then the investor would have been down by 30% during that period but proper Gold Funds/ETFs stayed the course.
Hi,
Please share taxation angle when buying from secondary market. for example. if we buy an SGB which is maturing in 2 years. As per understanding, it should be 0% capital gains tax as am holding till maturity (8 years of the bond). However my actual holding period is 2 years (less than 36 months so will it trigger short term tax).
Hi, taxation has been explained in the video itself including the scenario you've mentioned in the comment. Pls have a look, thx!
Kya small cap mutual fund NAV zero ho sakti hai bear market me please reply
Yes, zero ho sakta hai but chances kaafi kam hain. Zero matlab 100% fall in stock price .. maximum drop maine jo aajtak dekha hai, wo hai 75% in year 2008.
What is combined expense ratio.. like underlying expense plus normal expense ratio is given. In case of SBI 0.10+0.65=0.75 total it gets.. how do u get that 0.10??
Refer to the scheme's fact sheet for the scheme expense ratio -- it's available on their website
Brilliant video Shankar Sir. I have invested via monthly SIPs in Gold ETFs for the last 1-2 years. They have been delivering, especially in the previous 3-4 months. Will you please also talk about Silver ETFs sometime in the future? Why can't silver be used as a hedging instrument?
Thank you for your appreciation and suggestion, Rohan. Silver is not similar to Gold from many perspectives and it makes a very weak hedge. On the internet, pls chart out the last 20 years of silver prices and you'll see a resemblance to how the equity markets have moved.
Is it possible to do SIP in Gold ETF. Kindly explain how
Shanker ji, Are gold ETFs actually backed by physical gold. Reason i am asking bcoz there may be so much money invested in gold etfs that ther is not so much gold physical gold existing !
From what I have read, Gold ETFs are backed by physical gold. The market value of gold (discovered) in this world is ~$14 trillion. In Indian rupees, it comes to 11,62,00,000 crores. Gold ETF+MF AUM in India is about 30,000 crores.
How to download SGB ???
ThankYou Sir........!!!
Most welcome
Thanks for this video sir. Sir, I am buying SGBbonds everyone since last 1.5 years through my dmat acc. But I never received any interest till date. May I know how to check ?
Dear Sureshkumar, I see similar complaints on twitter. Maybe you can connect with a couple of those users and understand the solution that worked for them
twitter.com/search?q=sgb%20interest%20not%20received&src=typed_query&f=live
In another article, a user says:
a) First contact the entity from where the SGB was bought i..e banks, post office, stock exchange etc.
b) And if not resolved, then write to sgb@rbi.org.in
Hi shankar, hope u r doing good.. we still get 2.5% interest if u buy in 2ndary market?
All well, thank you. I found a tweet in this regards: twitter.com/agarwalnaveen31/status/1592914183687143425