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💰Gold ETF vs Gold Funds | Which is More profitable investment? LLA GOLD Ep#3 Financial Advice - YouTube
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Hello and welcome to labour law advisor
My name is Mandeep.
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Today I will tell you about 2
More ways to invest in gold
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Which are gold ETF and gold funds
What is the difference between the two
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Where will you earn more profit
How is it better than digital gold
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How is digital gold better than this
Where will you earn max profit
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Where will be your money safer
I will be talking about all these points
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And if you are thinking that why has
Mandeep suddenly changed to golden Boy
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so the reason for that is Whenever there
is turbulence in the stock market
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then gold market rises and just
think if you have invested in
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The stock market for 5-10 years and last
The month when the stock market miserably
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Received a downfall, your investment value
Must have become very low, there is
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Nothing to worry about because that
investment value may rise later but
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if you would have needed money in
that difficult time, would you have
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been able to withdraw your equity
investment and even if you would
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have been able to withdraw you
would have to do it with a heavy heart
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because your investment value was very low.
In that case, just think
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if you had invested in gold a bit
then gold prices went high
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so you would have been able
to sell out your gold investments
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and fulfil your needs therefore
you should invest 10% of your
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total investment in gold as well
so that when the stock market crashes
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even if your investment value temporarily
decreases you can rely on your gold
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investments if you want to withdraw
during those difficult times
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now let's hurry and understand
what are gold ETF and gold fund
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what is the difference between the two
and the entire story so that
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by the end of the video you can
decide how you want to invest in gold
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[intro music]
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so first let's talk about gold ETF before you
understand gold ETF you'll have to
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understand ETF, ETF stands for exchange-traded fund.
they can be of different types
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one is Sensex ETF, one is nifty ETF
Sensex ETF means if you invest
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your money in Sensex ETF than that
money proportionately will be
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invested in 30 companies of Sensex
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now the way Sensex performs the same way Sensex ETF will also perform
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if Sensex rises that ETF also rises if Sensex falls then ETF also falls
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So you buy these ETFs in units and the price of one is the NAV
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the same way you call it in mutual funds
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and to buy ETF
you require a Demat account
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the same way you buy shares
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you can also buy ETFs
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now gold ETF means it will
invest your money in 99.5%
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purity gold but it is not necessary
that it invests all its money in gold
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maybe it invests in RBIs
gold monetary scheme or in
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mining companies or in gold companies
stocks, the point to be noted is that
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Your money is getting invested in
gold only and as the gold rises your
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the investment will also rise
and if gold prices fall your
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gold ETF will also fall. To buy these
you need a Demat account
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and because I told you earlier
that money will be invested at different
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places in ETF so this work is done
by the asset management company
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now when there is an asset management
company it means that your money
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will be managed and to manage your
the money you will have to give expense ratio
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Just like you pay in mutual funds
so gold ETF is also a kind of mutual fund
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but you buy and sell these
through Demat account just like you
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buy shares through Demat account
the same way you can buy gold ETF
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and my personal favorite is
ZERODHA because there is
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No brokerage on equity delivery
Even you buy and keep
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Gold ETF you don’t have to pay
Any brokerage so to open a
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The Demat account I have left a link
In the description box, you can
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Check it out after this video first
Let's understand what is gold funds
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Gold funds are also mutual fund
You don’t buy these from demat account
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but you buy it through your
Mutual fund app and
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The money invested here is directly
invested in gold ETF means
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The product is the same only the ways of
investing is different, either you directly
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Invest in ETF through Demat account
or you can invest in a gold fund from
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your mutual fund app and then that
money will be invested in gold ETF
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now the product is the same but both
have its advantages and
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disadvantages so let's understand
whats that and here comes the
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comparison and firstly I have already
told you how to buy, gold ETF
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has to be bought from your Demat
account and gold funds you will
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have to buy through mutual fund app
for that, you can download the Kuvera app
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I have given the link in the description
Box. The next point is SIP if you buy
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The gold fund that is from mutual
Fund app than you can get the
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SIP did but if you buy gold ETF Through Demat
account you can't Get the SIP done
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if we talk about the minimum investment
some gold ETF's NAV reaches around 1gm gold
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and at the same time, we talk about
gold funds there you can start an investment
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from rupees 500 also. If we talk about
liquidity both of them are highly liquidate
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you can sell your gold investments anytime
but in this, there is a very important point
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before you do your investment that I will
tell you by the end of the video
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if we talk about the exit load you can
sell your ETF anytime and you will not
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have to pay for the exit load
but if we talk about gold fund then
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If you sell it before one year then you might have
to exit load up to 2%, in many funds this can be
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1% or even less than that
but exit load can be there
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talking about the expense ratio you will have to pay
have to pay an expense ratio in both
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the only difference is you will have to pay
more in a gold fund, like it can go up to 1.5%
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but if you do your research you will find
some funds whose expense funds would
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be less and if I talk about gold ETF
there too you might have to pay
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1% of expense ratio because
Ultimately your money is being
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Managed by an asset management company and to
provide this it will charge some money
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I am telling you this
The expense ratio on the higher side there are
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Some really good ETF and gold funds where
The expense ratio is very less, for example
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If you see HDFC gold funds there
The expense ratio is 0.29%
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If I talk about the brokerage you don’t
have to pay it in Zerodha
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But some other brokers might charge a
brokerge for investing in gold ETF
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but gold funds, there is nothing like this
now lets about tax, the same rule
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is applied in tax, if you sell your ETF
before three years then you will be
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charged short term capital gain
that will be added to your income
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and you will have to pay tax according
to the tax slab. If you sell if after 3 years
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then you will be charged long term
capital gain where you will be charged
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20% tax + 4% CESS with indexation benefits
If I talk about the physical delivery of gold
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Then in gold ETF if you have min 1kg
Around the price of gold than you can
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Apply for physical delivery but in gold
Funds there is no physical delivery
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You can't mortgage any two to apply
For loan. These were some major points
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That differentiates gold fund from gold ETF
Now if you are thinking why brainstorm
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When digital gold is easily available on
Any app these days, so let me tell you
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When you buy it through the app you
Have to pay 3% GST and when you
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Will sell it you will have to bear
3% losses, we call that spread,
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In this, a lot of costs are involved like
Transaction cost, storage, and insurance cost
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and all these come to a total of near 3%
So basically you have to give 3% GST
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When you buy and 3% when you sell
so there you lose 6% in total in digital gold
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yes it is accepted that there is
the expense here too but not more than 1.5%
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and there are very good gold funds like
HDFC gold fund where I can see
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expense ratio is 0.29% so you will
receive a lot of benefits in gold ETF
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and gold fund over digital gold
and now when we talk about the verdict
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yes, a gold ETF is cheaper than a gold fund
because here you have to give less
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expense ratio and there is no exit load
but at the same time
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the minimum investment amount can be higher and
there is no SIP means every month you have to
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remember and make an investment
at the same time if I talk about gold funds
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then yes it is expensive than ETF because
you have to give a high expense ratio
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and exit load but here you have an option
of SIP and investment amount is also less
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so here you have to decide which product
is better for you, both of them invests in ETF
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only, the gold fund is also just the way to invest in ETF.
Now the important thing
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to note here is in which ETF do you
want to invest because all these ETFs are
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listed on the stock exchange you can buy
any ETF through your Demat account
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but when all the ETF run according to ‘
the gold price than how to decide
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which one to buy for that you have to
check every ETF's asset under management
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means AUM, it means if there is not much
amount invested in any ETF than it can be
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possible that it is not very liquid and in
future when you have to sell it you might
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not be able to therefore you should invest
in those investments whose AUM is high.
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India’s biggest gold ETF is Nippon gold
ETF and its AUM is 2290 crore.
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After this comes to the SBI gold ETF
With 626 crores and then comes HDFC gold ETF
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At 615 crore and if you search on your Demat
The account then you will search through these codes
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Similarly in gold funds, if you want to
Check asset under management than you
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Have to open your mutual fund app,
for example, I have a Kuvera app so when I
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search HDFC gold fund, on top I can see
478 crore rupees funds are managed by it.
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So if you have made up your to invest
In gold ETF than I have left a link to Zerodha
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Demat account and of mutual fund app
Kuvera and if you think that
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LLA working hard to make useful videos
for you then you can support us
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without any extra cost just by checking
Out that link, we will keep bringing you
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Such useful videos, whatever suggestions
You have please us know in the comments
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Because I do listen to them, one of those
Suggestions were that Mandeep speaks really fast
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so now I am trying to speak slow
Whatever suggestions you have, please tell me
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I will work On all of that, I will meet you in my
next video with a bit of improvement
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till then take care of yourself and invest
your money wisely, bye
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