Calculated the Returns | Gold vs Digital Gold vs SGB vs ETF | SHOCKING RESULTS

Calculated the Returns | Gold vs Digital Gold vs SGB vs ETF | SHOCKING RESULTS

#Calculated #Returns #Gold #Digital #Gold #SGB #ETF #SHOCKING #RESULTS

If you are planning to buy digital gold then wait You might want to watch this I know, last year, I uploaded a video and explained The benefits of buying digital gold over physical gold But when it comes to identify the best type of gold investment

Then it is definitely not digital gold If physical gold is worse then digital gold is second worse in my opinion So, this is going to be a very important video because I will tell you That how can you double the returns of your gold investment

I will also tell you a secret which is used by some people To get 5-10% return in a single day in gold investment Welcome back to the channel I am money-minded MANDEEP [Intro Music] First of all, identify the reason that why do you want to buy gold

If you want to buy it as jewelry then you have to ignore its investment returns Because that is not impressive. I will also show you the proof But if you want to buy gold as INVESTMENT then there is a lesser-known option in physical gold

This is true that you have to pay GST when you will buy gold You also have to pay Making Charge while buying physical gold But if you buy pure 24 Carret Gold which is not in any form like Coin, jewelry item

If that is a Gold Piece then you don’t have to pay Making Charge If you buy gold in any other form apart from this Suppose you bought a Gold Coin Then you have to pay around 7% Making Charge while buying a Gold Coin

The data is from Tanishq Website as today’s date If you even buy a small earring If I check it on Tanishq Website Then at the price of ₹89K, I have to pay around 29% Extra Making Charge I also have to pay 3% GST on the total of these 2 costs

Then finally, I will be able to buy that earring in 1.18 Lakh My purpose in this video is not to explain the jewelry calculation I just want to explain that if you want to buy Gold as an investment

Then what is the best way and how can you double your returns Digital Gold has its Pros and Cons But its disadvantages are much noticeable than its advantages First, let’s know its benefits If you buy the digital gold

Then the company store the digital gold worth that amounts in its safe That means you don’t need to worry about theft or security-related issues Its 2nd benefit is, you don’t have to pay Making-Charge if you buy it That’s why the cost of buying the digital gold is less

But you have to pay a 3% GST on its buying price same as Physical Gold You can demand its physical delivery if you want But you have to bear some extra charges even the Making Charge

It’s another great benefit is that you can even buy digital gold worth ₹1 or ₹2 So, there is not any minimum investment requirement Now, let’s discuss its disadvantages Let’s say, I am buying digital gold using my mutual fund App

But you can buy it using any App It is not the App that sells the gold There are only 3 companies in India MMTC, SafeGold and Augmont MMTC is a government company Rest 2 are private companies If you buy the digital gold using any App that means

Anyone among these 3 companies is selling that gold to you So, I buy the Gold worth ₹100 using my Kuvera App You can see the live gold rates in its top-left corner The company name is also there in the top right corner which is Augmont in my case

I have entered 100 Rupees in the middle. When I proceed it Then I can see ₹103 instead of ₹100 on the transaction page As I explained earlier, I have to pay 3% GST while buying digital gold

So now, I have got the digital gold worth ₹100 and I want to sell it When I will sell the Gold worth ₹100 Then I can’t sell it at the previous live price while buying ₹5009 I have to sell it at a 3% decreased rate You can clearly see sale rate

The value of my ₹100 Rupees gold has automatically changed to ₹97 My sale rate is ₹4841 but I bought it for ₹5009 What is the reason behind this 3% difference This is known as SPREAD and multiple costs are associated with this like Like storage cost, Insurance cost

Because the company stored that gold on our behalf That’s why the company is demanding storage and insurance cost This is also possible that the company is charging its profit margin from you So, you saved the Making Charge by buying the digital gold instead of physical gold

But you have to pay minimum 3% Spread while selling it This 3% Spread is not flat. It can easily vary between 3 to 6% These are its Cons. It also consists of some challenges Let me change the heading to Cons and Challenges The first challenge is NO INDEFINITE HOLDINGS

You can’t hold this digital gold in your App for forever After a point of time, you will be urged to sell it or take its physical delivery You may have to bear Making Charge if you take its physical delivery If you choose another option i.e. selling it

Then you have to pay capital gain tax on it but you wanted to hold it It is like, you have to bear losses in the both condition One other challenge is that these 3 companies MMTC, SafeGold and Augmont All 3 companies are unregulated

SEBI, RBI, or any other regulatory body doesn’t regulate it I am not saying that these companies are fraud. These are all very good companies fulfilling all the compliances I just want to clear it that Suppose a company X has 100KG gold

But this company gets the orders of online gold of 200KG So, the company can fulfill all the orders of 200KG on that day You may think that you have gold by seeing in your App But it is not sure that the company actually has that gold on your behalf

Again, I am saying that all these 3 companies are reputed companies I am not blaming these companies I just want to tell you that If this industry is unregulated then this can be implications

If digital gold is not the best way to invest in gold then what is the best way? SGB (Sovereign Gold Bonds) are issued by RBI in a year multiple times You have to apply between the specific issue dates There is not any actual gold behind this

This is not at all gold. It is a piece of paper which you buy at the price of gold And this is redeemed at the price of gold in future This piece of paper will generate the same return as gold bullion in a specific period

But how will investors satisfied with the paper? Gold has its value. But this paper is issued by the government that’s why it is widely accepted. The default risk is 0 unless India faces any situation like Zimbabwe Till then, it is 100% secure What is special about it?

First of all, let me tell you its charges. There are not any charges on it. You don’t have to pay 3% GST Which you have to pay in all types of gold investments (Not all type actually) You pay 3% GST in physical and digital gold

But you don’t have to pay that 3% GST in SGB There is not any making charge and insurance or storage charge as there is not any actual gold It means there is not any type of charge. You buy it at the pure gold price.

You are encouraged that if you apply SGB online Then you will get a discount of ₹50/gm What are its advantages? Its biggest advantage is that Capital gain tax is not applicable for this Your profit in SGB investment is completely tax free

Its 2nd benefit is that RBI Pays you 2.5% per annum interest when you hold it So, charges are 0 in it. You can avail a discount while buying. Its profit is completely tax-free And you get an extra 2.5% interest when you hold it Let’s know something important about its interest

It is a simple interest. It means you get a fixed amount of interest on your investment amount every year. You get it twice a year. So, you get a 1.25% interest after every 6 months. This interest income is not tax-free. Nothing is wrong with it

As this 2.5% interest is like a bonus because you don’t get it in other options. So, you can happily pay tax on this interest income. Now, let’s talk about its minimum investment. You have to buy a minimum of 1 SGB which is equal to 1 Gram of gold

You have to hold this bond for 8 years after investment. You have to redeem it from RBI after 8 years and you will get tax free profit But if you can’t wait for 8 years. Then RBI gives you an option

Of early redemption after 5 years. You can redeem it if you want. The profit in that case will also tax-free, not taxable Many people asked this question in the old video. So, let me clear it You don’t have to pay any tax if you redeem your bond through RBI

Either you redeem it after 5 years or after 8 years. Once you cross 5 years Then you can do early redemption multiple times instead of 1 time You will have an option every 6 months But what if you even don’t want to wait for even 5 years

Then RBI says that don’t receive it in paper form. You will get an option to enter DP ID while filling the form Put your stock broker 16 digit DP Id in the application form Your SGB will be shown in holdings in your Demat account. How this is good?

As you can easily buy/share shares on BSE/NSE You will be able to sell SGB in stock exchanges through Demat account As the stock price can fluctuate up or down as its demand and supply Your SGB price will also depend on demand and supply same as shares

So, you will rarely sell it at an actual gold price So, your SGB will be sold at some loss or at some premium price depending on the price There is a trick involved in it which I recently figured out

Many people are selling their SGB at even 10% extra rate using this rate If you sell your SGB on the stock exchange then there is only one case When you will have to pay tax on your capital gain depending upon LTCG or STCG

But what about the person who buy that SGB from you at the stock exchange The same rules will be applicable. If he holds till maturity and redeems it through RBI Then he doesn’t need to pay any tax

But he has to pay tax if he sells it again on the stock exchange to someone So, you don’t have to pay tax If you get your money back from RBI after maturity First of all, let me tell you that how should buy it

RBI announces dates on a link which is given in the description You can check the next SGB issue date by visiting that link Its subscription window usually opens for 3-4 days and you can apply And the SGB will be shown in your Demat account after 1 week usually

It’s one issue will open after 2-3 days. The next issue will open next month So, no need to hurry. Please understand the process clearly You must have a Demat account for it. You can apply through a broker or online net banking. The process is the same in both cases

You will get a ₹50/gm discount in both cases But some banks are doing arbitrary as someone told me Banks are not providing the DP Id option in their application form. I am telling you this about only a particular bank. They say you that

You must have a Demat account in their bank only to receive SGB In Demat account I think this is wrong. If you don’t want this too much hassle Then you can open the ZERODHA Demat account using the link in the description

You can easily apply for SGB as your account will be ready to use within 24-48 Hours You have to visit after opening an account You will see the price of 1 SGB there which will be equal to the price of 1gm gold

Rs 50 per gram discount will be available there for you You just have to enter the number of grams If you enter 3, you will be allotted 3 SGB units which will be equal to 3gm of gold

Please note the point. The order will be placed on the last date of the subscription window There must be a sufficient balance in your ZERODHA account on that day otherwise, the order will be canceled How simple is this

You can subscribe to it when RBI will open it. Let’s know the trick People are able to sell their gold at 5-10% extra rate using that trick Or people are able to buy gold at a 5-10% cheaper rate using that trick

That trick lies on stock exchanges. As I told you earlier that You can receive it in the Demat account. Let me open my ZERODHA Demat account I have opened the chart of SGB Feb 2028 which script code is SGBFEB28

So, it will be matured in 2028. Its candlestick chart is before me As I can see, its last traded price is ₹5244. Let me clear if you don’t know SGB’s recent issue’s price is 4792/gm The next issue will also not such expensive

You may think that the price earned good who sold at such a high rate And it was not a good deal for the person who bought it at this rate The biggest question is that why that person bought this bond at ₹5244

That person didn’t notice one point I uploaded a video last year In which I explained to you that how to use Kite App for buying/selling stocks I told you the types of orders. One is LIMIT ORDER and another one is MARKET ORDER

LIMIT Order means I want to buy at a specific price. That means I will only sell my SGB if it hits 5244 otherwise, I don’t want to sell it If I put the buying market order then I am giving this signal to the stock exchange that

Price doesn’t matter. I want to buy SGB today at whatever price is available The stock exchange just matches these 2 types of orders. Its opposite is also true. If I put the buying limit order Let’s say the current SGB price is 5000 and I placed a limit order of 4600

I am saying to the stock exchange that buy it only if it comes to 4600 Suppose another seller has put a market order of selling his SGB Then the SGB of price 5000 will match to my order and I will buy it at 4600

And that person has to bear this loss. You may think that Why doesn’t happen in the case of big companies’ shares Because there is high liquidity. I am talking about the scenario Where only 5 or 10 SGB orders are being placed

In that case, as the number of buyers and sellers are very less So, there are chances that people grab such arbitrage opportunities I am not encouraging you to buy SGB at 10% lower rate by making fool someone

I just want to tell you that if you want to buy or sell it then Please never put a market order for SGB Always see the order book and Analyze the market depth and put the order at the price which is near to the real gold price

Always put a limit order so that you will not sold it at 5-10% discount by mistake Or you will not buy it at 5-10% premium price by mistake This was about SGB. There are 2 other ways of gold investment

And a lot of people are not aware bout those options What is a gold ETF? You can buy/sell it on the stock exchange Usually, its price should be equal to 1gm of gold but this is available in fractions So, you can easily start with a little amount.

There is actual physical gold against the money you are investing in gold ETF But it is not like digital gold. Because ETFs and Gold mutual funds are regulated by SEBI So, we can confidently say that there is equivalent gold behind our amount And ETFs will also track the gold returns

It is flexible as there is not any lock-in period. You can buy/sell at stock exchanges whenever you want but you may face less liquidity You don’t have to pay 3% GST or any other types of charges in this like SGB

But here corresponding AMC will charge you a certain expense ratio Which used to be high earlier but this is as low as 0.1% at present So, these are some advantages The last way of gold investment is the gold mutual funds Gold mutual funds invest your money in gold ETFs

So, the product is the same but the investment ways are different For one, you need a Demat account. You need a mutual fund app for another You can even start in it without a Demat account. As this is a mutual fund

So, you can even start a SIP for as low as ₹100 There are 2 types of hidden costs. I told you one which is expense ratio (0.1%) 2nd hidden is not a cost but it is an important point. A mutual fund always holds a certain amount as cash

Suppose the AUM of a mutual fund is 100 Crore. So that mutual fund may hold 2.5%, 5% or 10% cash There are some rules about holding the minimum and maximum cash To know that how much percentage is hold as cash in a gold mutual fund

I analyzed the Axis mutual fund. They hold 2.5% of AUM as cash It means if you invest ₹ 1 Lakh rupees in that gold mutual fund Then 2.5% of that amount will not even be invested You shouldn’t assume that only 97.5% of 1 Lakh will be invested

It doesn’t work in that way. Your fund’s NAV accordingly decrease a little as you invest at NAV in that fund And you will also redeem it at NAV. The expense ratio and holding cash are automatically adjusted in your NAV I have prepared an Excel sheet to compare the returns

You have invested a specific amount in 6 types of gold investment on 20 July 2016 There was an open SGB issue at that time and I have taken its exact price Suppose you redeemed this investment on 26 May 2021

I have calculated the SGB’s redemption price as per RBI Guidelines Mutual fund investment had been done on basis of NAV of 20 July 2016 and 26 May 2021 The physical gold and digital gold investment is done on basis of gold bullion price As per India Bullion and Jewellers Association Ltd.

I have calculated the returns of different gold investments in this sheet I have calculated the returns pretax and post-tax. You can clearly see That the IRR in the SGB is 11.6% It is 2.8% in the case of earing

It is 8.9% in the case of mutual fund Its post-tax IRR is much dangerous SGB is again leading with 11.6% But it is only 1.7% in the earing case Digital gold has 7.1% return Mutual fund has 7.8% return

The returns of actual gold during the same period from 2016 to 2021 was 9.7% If the bullion form of gold is growing at the rate of 9.7% Then the SGB is giving you more returns than that If you want to know the process of making this excel sheet

Then I will provide the link of an unlisted video in the description There can be arguments like suppose gold prices crash You are unable to buy SGB Issue or You are unable to buy it in the Demat account even after placing a lot of orders

Then what can we do? How to grab such an opportunity I will go with ETF or gold mutual fund which are the 2nd best alternatives Always remember a point when it comes to conversion to physical gold It will be not possible in SGB as there is not any actual gold

It is possible in the digital gold and you have to pay some charges You may have to pay making charges but it is possible But this is not possible in gold ETF or gold mutual fund

It is possible in an ETF but you have to hold a minimum of 1 KG gold for that And that gold has a high value. The process is also complicated But I am sure you will do enough research in that extreme case

But if you have some ETF holdings worth thousands Then you can’t convert that in the physical gold Then what is its solution? First, you have to sell it Then you have to pay tax on the amount which you will get

Then you can buy physical gold by the remaining amount So always remember while investing in ETF or gold mutual fund Take it only for an investment purpose. If you will require physical gold in future Then maybe this is not the right way.

As you will sell it, you will be liable for tax if you fall under the taxable limit So, I hope you will like the video. Let’s meet with a new video Please subscribe to our channel and press the bell icon Please follow us on Instagram. By By [Outro Music]

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