🔍
Sovereign Gold Bond Scheme – Buy & Invest in Gold Online (Using Zerodha Kite) - YouTube
Channel: Asset Yogi
[0]
Namaskar my name is Mukul and welcome to asset Yogi
[4]
Friends, we saw in our last video that there are two types of people who buy gold.
[9]
The first consumer who buy gold as jewellery
[13]
Either to use today or to use in future.
[15]
Or they want to buy gold now for a wedding in the future.
[20]
Because they think that the price is good today
[23]
and the price will increase in the future, so they want to buy gold now.
[27]
There are other types of people who invest in gold like an investment.
[31]
How we should invest in gold ?
[33]
How It is compared with stocks, how much gold we should keep in our portfolio.
[38]
We talked about this in the last video, if you have not seen it,
[40]
then you must see it after watching this video.
[42]
We have seen in the previous video that when we buy physical gold
[46]
It has some disadvantages and there are some risks associated with it.
[49]
For example, when you buy physical gold,
[52]
20% to 25% goes into the design and making changes.
[56]
There is also the risk of storage, if you keep gold in the house then the risk will remain.
[61]
If you keep the gold in the bank then you have to pay its charges.
[64]
The third risk impurities
[67]
Physical gold is made in 22 carats or less.
[69]
Along with it you also have to pay GST.
[72]
Along with this, there is also a price risk,
[74]
the price may increase in the coming time.
[76]
Because we want to lock the price today only
Because of this, we buy gold jewelry.
[81]
Many people go to jewellers and deposit monthly money.
[84]
So that when their lump sum amount gets accumulated, then they can buy jewellery.
[88]
We can tackle all these risks very easily
[91]
There is a great product for this Sovereign gold bond which is issued by RBI.
[96]
And it also has the guarantee of the government of India.
[98]
According to me, this is the best way to invest in gold.
[100]
And we will soon know why I am saying this.
[103]
Along with it, we will also see such strategies
[106]
how we can eliminate the risk to a great extent by using Sovereign gold bonds.
[110]
So stay tuned in the video
[111]
Press the bell icon while subscribing to get notification of the latest finance videos
[117]
First of all, let us understand what Sovereign gold bonds are?
[121]
This is a very simple product
[122]
It is Government Bank securities
[124]
Its one unit value is 1 gram gold and it is 24 carat gold
[131]
What's it's value here ?
[132]
Whatever the current price is going on as of today that became its value.
[138]
And how do we get profit in this
[140]
Let's say you bought one unit today, or you bought 1 gram of gold today at @4800
[144]
In the future, it will become ₹6000 after 7-8 years so you made a profit of ₹ 1200 per gram.
[151]
Apart from this, you also get an interest of 2.5% per annum.
[156]
This is a simple interest calculation that you get every year.
[159]
But along with this, there are many other advantages of Sovereign in Gold Bonds.
[163]
We will talk about 10 advantages that make this a very unique product.
[167]
If we look from a risk-reward point of view.
You hardly get to see all these advantages
[172]
together in any other product, whether we talk about Gold, ETF, Mutual Fund
[178]
Or even if we talk about stocks and mutual funds.
[180]
The first advantage of this is that you do not have to pay for any design or make changes.
[185]
like when you come out of the showroom in physical gold,
[188]
your money gets down 20-25 %.
Second, there is no storage risk or cost here.
[194]
Like in physical gold you have to suffer a lot for its storage
[198]
There is no such risk in it,
Third, there are no impurities.
[202]
Like in physical gold, you have to invest in 22 carats or less
[205]
But here you are investing in gold at 24 carats, and here there is no such risk that
[212]
the jeweller gave you 18-carat gold by saying it's 22-carat gold.
[216]
And fourth, there is no default and safety risk
[218]
Because there is the backing of the Government of India.
[221]
Fifth, GST and STT are also not applicable.
Therefore, no tax will be levied.
[226]
If you buy physical gold, then GST is levied there.
[229]
Security Transaction Tax is levied if you buy stocks.
[231]
So no such transaction tax is levied in it.
[234]
And sixth, capital gains tax is also not levied on it.
[237]
Its maturity period is 8 years, but after 5 years you can sell it anytime.
[243]
In 5 years, 6 years, 7 years or 8 years.
[246]
So if you ever sell it after 5 years, then the capital gains tax will not be applicable.
[251]
But if you look at other investments, either gold ETFs or gold mutual funds,
[255]
Stocks, normal mutual funds all are subject to capital gains tax.
[259]
Let us understand a little better what Capital Gains Tax is.
[262]
If we sell an investment within 3 years, then short term capital gains tax is levied
[267]
So whatever profit you make from that investment gets added to your income.
[272]
And tax is levied according to your tax slabs.
If you sell it after 3 years,
[276]
Hence long-term capital gains tax is levied which is 20% + tax.
[281]
But to calculate it, you get an indexation benefit.
[284]
That is, out of your profit, you subtract inflation.
[288]
We subtract the inflation that arises
[291]
After that our profit left over is subject to capital gains tax.
[295]
So, if you sell the Sovereign Gold Bond after 5 years,
[299]
you will not be liable to any capital gains tax.
[302]
It's a big advantage but here you should keep one thing in mind.
[305]
Your capital appreciation,
that is, the price of gold is increasing.
[308]
There is no capital gains tax on it but the interest you are getting is taxable.
[314]
That interest gets added to your income and you have to pay tax on that, as per your tax slab.
[318]
Its seventh advantage is that you can also take a loan on it.
[322]
Like you take a loan by pledging physical gold
[324]
Similarly, you can also take a loan by pledging the Sovereign Gold Bond
[328]
It can be kept as collateral.
[329]
The eighth advantage is that if we look at the returns compared to the risk.
[333]
then they are observed to be very good.
[335]
Because capital appreciation is arising here.
[337]
And second, we talked about in the previous video that
[339]
You can expect 8 to 10% returns in a long duration.
[342]
Along with this, the interest of 2.5% which you are getting
[346]
That makes its returns even better.
[348]
The ninth advantage of this is that you can also keep it in Demat form.
[352]
As there is a risk of losing the physical certificate.
[355]
We can also keep it online.
[356]
In the dematerialised form in the Demat account
[359]
And how can we buy it in the Demat account
[361]
we will see that soon
[363]
And the tenth advantage of this is that it can also be traded on the exchange.
[367]
If you want to sell it before 5 years then you can sell it.
[371]
We have talked about the advantages.
[373]
Now let us understand how the Sovereign Gold Bond works.
[375]
Like we talked about earlier, the minimum investment here is 1 gram.
[379]
And the maximum per individual investment is 4 grams.
[383]
Its issue is currently open
[385]
You can invest from 6th July to 10th July.
[387]
And by chance, if you do not have a Demat account.
[389]
or there is some other problem
[391]
So you can also invest in it in August.
[393]
So in this year for example RBI had released 6 series.
[396]
The fourth series is going on now.
[397]
And the fifth and sixth series will come in August.
[400]
Every year the RBI establishes 5 to 6 series.
[402]
When you can invest
[404]
But if you have to invest midway, how will you invest?
[408]
We talk about that too
[409]
Now we talked about the Advantages.
[411]
Every investment also has certain limitations.
[414]
So let's talk about its limitations as well.
[416]
Its first limitation is that your money gets lock- in for a minimum of 5 years.
[421]
You can withdraw it only after 5 years
[423]
But it is not an extremely big limitation as it is tradable on exchanges
[427]
If you want, you can sell it even before 5 years.
[430]
But here comes the other limitation.
[432]
that if you sell before 5 years then you are liable to capital gains tax.
[437]
The third limitation is that here you do not get the option of SIP.
[440]
Many people have a habit, they think that every month they keep investing some money.
[444]
If some people invest in gold,
[446]
They deposit some money to the jeweller every month.
[449]
Mutual funds also have the option of SIP.
[451]
So you don't get that option here.
[453]
But we can tackle that too to some extent.
[455]
We will know that too soon.
How can we tackle it?
[458]
We have 4 ways to invest in Sovereign Gold Bonds.
[461]
First, we can do it through the bank,
[464]
Second, you can do it by going to the post office.
[466]
Third, We can apply by visiting the website of Stock Holding Corporation of India Limited.
[471]
And fourth, we can also do it directly through our stockbroker.
[474]
If we get the option and if we already have a Demat account.
[478]
If you invest in the bank or post office then this becomes an offline process.
[483]
And there are few hassles in it.
[485]
Because you have to go there and fill the form, you have to make your KYC.
[489]
And the investment proof you will get will be in a physical certificate form.
[493]
If you want to sell it before 5 years then it will be a bit difficult for you.
[497]
So we should prefer that we keep our investment in Demat form.
[501]
Because there is no risk of losing the certificate there.
[504]
and they are tradable on the exchange so you can sell whenever you want.
[507]
So the best option is if you already have a Demat account.
[510]
Then apply through your stockbroker.
[512]
It is very easy to apply.
It is a single-step process.
[515]
This option was not available in UPSTOX so I will show you in Zerodha how to apply.
[520]
And by chance, if you do not have a Demat account
[522]
then you can open your Demat account.
I will give you the Zerodha link below.
[524]
This is a discount broker, the charges are very less.
[527]
And the account is also opened very shortly.
So to apply through Zerodha,
[531]
If you type on Google Gold Zerodha, you will get the link to Gold Bond Zerodha, click on it.
[536]
After coming down we have to click on Login with Kite.
[540]
I have already log- in,
[542]
you have to enter your username and password in it.
[544]
And you will be able to log in with the kite only when your Demat account is already opened.
[547]
After that, we click on Authorized, in authorized Gold bonds
[551]
After that, you will get the option to buy Sovereign Gold Bonds.
[555]
Here online the price is showing 4802 rupees per unit
[559]
Because there is a discount of ₹ 50.
[561]
And here we can put any quantity.
[564]
Now let's say I enter 5 quality.
[566]
First this, I should have ₹ 24000 in my account.
[569]
After that, the order has to be placed.
[571]
So the order is accepted.
[573]
Quite an easy way, and if we want,
we can also delete and edit the order.
[577]
If we want to buy a Sovereign gold bond in the secondary market
[581]
So we can purchase through our Demat account
[583]
With whichever stockbroker you have an account.
[585]
Let's see in Zerodha, I will go to the watch list and type SGB,
[589]
So see, I have come across a lot of options with different maturity periods.
[593]
For example, Sovereign Gold Bond is expiring on Aug 24th.
[598]
Let's see how much it is available for us here.
[601]
Here it is slightly expensive, the price is running at 4874.
[604]
Why I will buy here for so much because there I am getting it for 4802 there
[607]
Let's see other options by coming down, can we get this for a little cheaper
[612]
Let's see that on 27 august we are getting 4850.
[615]
and see below, Let's take a look at April 28
look here it is 4790.
[621]
And here let's see the offers and bids,
We are getting offers of 4799
[626]
And in this way we can apply, So to apply here you will go to buy,
[630]
So just like we buy stocks, here also we can put a limit order and market order as well
[634]
And here in the limit order, I can fix my price.
[637]
If I get a seller at my price then the order will be executed.
[643]
Let's say I have to place an order because I want to take delivery of it.
[646]
I'll go to the CNC and 4795 I entered the price here.
[650]
It is a limit order and I also put it on Regular.
And here we will click on buy.
[655]
So see that the order has been placed
[658]
So we go through the orders and check it out,
So it is showing in open orders right now.
[663]
When it is executed it will show executed.
[665]
Then another unit of mine will be purchased from the exchange,
[667]
So we have understood all the ways to invest in Sovereign Gold Bonds.
[670]
Now let's talk about our strategies.
[672]
That's how we can minimize or eliminate our risk.
[676]
Firstly let us talk as a consumer, let say
[678]
you wanted to buy gold as a consumer for future use
[681]
You want to buy gold jewellery today you think that gold will be expensive in the future,
[686]
That's why you think you should buy the jewellery now and keep it.
[688]
But there we may suffer loss in it, earlier as we talked about Impurities and Storage problems.
[693]
That is different, but suppose you have given the design and making changes today
[698]
And you have its use after seven or eight years,
[701]
So either you will polish it and its cost will come and the design may be outdated
[706]
If you have a new design dismantled, you will have to pay the cost of the redesigning.
[709]
And you are not getting any interest in this money.
[712]
So what you can do, the amount you want to invest in that jewellery today
[716]
Buy the sovereign gold bond for that amount.
[719]
And whenever you need it after seven-eight years
[723]
by selling that sovereign gold bond for the same price
[726]
Because it is linked to the price of gold.
[728]
If the price of gold goes up, suppose today it is 4800 and later it becomes 6000 per gram
[733]
Then also you have an advantage you can buy the same amount of gold at 6000
[736]
by selling sovereign gold bonds.
And if its price goes down it becomes 4000.
[742]
Even then the price of Sovereign Gold Bond will be 4000 grams.
[745]
Still, you can buy gold by selling it,
[747]
So here we are getting two advantages,
[748]
First we do not have to pay for design and making changes twice.
[751]
You can buy the latest designs at the time when you need them.
[754]
And secondly, you are getting interest in this entire investment.
[757]
And because in this case the price of your investment is linked to gold itself.
[761]
So even if the price goes plus-minus it doesn't make much difference.
[764]
Because you have to buy gold only in the future.
[766]
But suppose if you invest this money in the stock
[768]
and that time if the stock market falls. you have to bear the loss, If you buy gold after selling it,
[774]
you may buy gold after a loss in the stock.
So we have discussed the consumer case.
[778]
Now let's talk about the investor too.
If we are taking gold as in investment
[782]
So obviously we want to buy today which means we are assuming
[787]
that the price of gold is fair today and it will go up in the coming time
[790]
So definitely you can buy Sovereign Gold Bonds today.
[793]
But if you think the price of gold is already inflated, If it's too much,
[798]
So what can you do in that case?
You can invest that money in FD.
[802]
There are Short term FDs of 3 months to 6 months.
[805]
when the price of gold gets slightly cool off
[807]
At that time you can buy Sovereign Gold Bond
[810]
And let say the RBI issue of Sovereign Gold Bond may not have come even at that time
[815]
you can still buy from secondary markets, Which we just saw in the Zerodha case.
[820]
You can also buy Sovereign gold bonds from the exchange,
[822]
Many people do not even know this method
[824]
That's why they probably don't consider this product.
[827]
so I hope from this video you have understood sovereign gold bond clearly
[830]
Its advantages, its limitations, and how to invest in it
[833]
We also saw the strategies,
[834]
In the next video, we will see the detailed comparison
[837]
physical gold vs digital gold
[839]
What is digital gold
[840]
If you are investing through any agency which stores it on its own
[845]
we will call it digital gold,
[847]
After that, we will also look at the comparison of the ETFs, Mutual Funds, Sovereign gold bonds
[851]
We will also discuss its pros and cons in the next Video, you should see that video too.
[856]
I will give you the links to the other information related to sovereign gold bonds of RBI website
[862]
If you like this video then please like and share it with your friends and family
[866]
They may not have much knowledge about Sovereign gold bonds.
[869]
So this video may help them.
[872]
If you have any suggestions related to this video
[873]
or channel please tell me in the comment section below
[876]
And if you haven't subscribed to the channel yet then please subscribe.
[878]
and press the bell icon to get the notification of the latest finance videos
[883]
See you in the next informative video.
[885]
Till then keep learning and keep earning
[887]
And be happy as always.
Most Recent Videos:
You can go back to the homepage right here: Homepage