Your family GOLD is NOT Valuable.!

Summary

In this engaging and informative video by Zero1 from Zerodha, we delve into the true value and various methods of investing in gold. The host humorously narrates a conversation on gold investments, highlighting the perception and reality of its value, especially in economic downturns. They explore different gold investment options, such as digital gold, gold ETFs, and Sovereign Gold Bonds (SGBs), assessing each one's pros, cons, risks, and accessibility with a fun "flag" system. Ultimately, the video prompts viewers to think about the best way to invest in gold and whether it aligns with their financial goals.

Highlights

• Gold's perception as a valuable investment might not align with its actual long-term growth compared to equities. 📉
• Investing in gold should be seen more as a safety net or a hedge against economic instability. 🛡️
• Physical gold involves additional costs like making charges and storage, reducing its appeal compared to digital alternatives. 🛒
• Digital gold, ETFs, and mutual funds provide easier and more cost-effective ways to invest in gold without the hassles of physical storage. 📲
• SGBs, issued by the government, not only track gold prices but also provide annual interest, making them an attractive option. 💼
• Liquefy your assets! The video evaluates how easily different forms of gold investment can be converted back to cash. 💧

Key Takeaways

• Gold is often seen as a 'safe haven' in economic downturns, acting as a hedge rather than a high-return investment. 🛡️
• Indian households hold a significant portion of the world's gold, emphasizing cultural importance over pure investment value. 💍
• Digital gold and ETFs offer accessible and low-cost investment alternatives to physical gold, which incurs additional costs like making charges. 🌟
• Sovereign Gold Bonds (SGBs) provide a safe investment avenue with government backing, offering interest in addition to tracking gold prices. 💰
• Each investment type in gold, from physical to digital, has its unique benefits and drawbacks, making it essential to choose based on individual needs and risk tolerance. ⚖️

Overview

Gold has long been perceived as a timeless investment, particularly in times of economic instability. Yet, as the video by Zero1 explores, while it might serve as a safety net, it doesn’t necessarily stand out for high returns when compared to other assets like equities. It's all about perception and reality intertwining in investing choices!

Dive into the myriad ways to invest in gold: from traditional buying of physical gold, replete with making charges and secure storage needs, to modern avenues like digital gold and gold ETFs. These new methods provide greater accessibility and lower costs, reframing gold investment as a more streamlined process.

The concept of government-backed Sovereign Gold Bonds (SGBs) also comes under the spotlight, offering a blend of security and annual returns. As the video cleverly unpacks these different investment paths, it nudges you to examine what truly matters in your investment strategy—security, growth, or liquidity?

Chapters

• 00:00 - 03:30: Introduction to Gold Investment The chapter titled 'Introduction to Gold Investment' involves a conversation where one person expresses reluctance to engage in a discussion about gold investment strategies, preferring to work autonomously without external interference. Despite being advised to explore various methods to invest in gold, the individual is frustrated with another person named Abish, who is suggested as a resource for assistance but is described as confrontational. The conversation reflects the challenges of seeking advice and investing effectively.
• 03:30 - 07:00: Perception of Gold Value The chapter titled 'Perception of Gold Value' explores the speaker's interaction with an individual who attempted to bribe them with 22 karat gold. The speaker intends to analyze the different kinds of gold and provide clarity to help others understand its value. There is a dialogue about personal perceptions of gold, where the speaker acknowledges that different people have varying opinions on gold as an investment. The individual shares their mother's positive view of gold as an amazing investment, while they personally prefer silver and diamonds but recognize gold's niceness.
• 07:00 - 10:30: Types of Gold Investments The chapter delves into the concept and evolution of gold as an investment tool. Initially, gold played a central role in the monetary system through the 'gold standard', but this was eventually replaced by fiat money, which derives its value from general consensus and perception rather than intrinsic worth. The text argues that in extreme economic conditions, such as downturns or hyperinflation, investors flock to gold as a reliable store of value and a safe haven. Furthermore, the discussion suggests a shift in perspective is necessary, viewing gold not just as an investment, but more significantly as a hedge — a form of financial cushion against economic uncertainties. This nuanced take posits gold as a strategic asset that offers protection and stability amidst financial volatility.
• 10:30 - 14:00: Investment Accessibility and Risks The chapter explores the topic of investment accessibility and risks, focusing on gold as a safe investment option. Gold is described as a less risky asset compared to equities and other assets, serving as a 'safety net' for investors. Over the last 40 years, gold has provided a return of around 9%, which is seen as favorable given its role as a 'safe haven' and a hedge in times of financial uncertainty.
• 14:00 - 17:30: Understanding Investment Costs The chapter titled 'Understanding Investment Costs' explores the notion of investment value appreciation over time, with a specific focus on the cultural and financial relevance of gold in Indian households. It highlights that approximately 11-12% of the world's gold is owned by Indian households, emphasizing not only the traditional appeal of owning physical gold but also the modern alternatives like digital gold. The discussion hints at the broader cultural ties to gold, such as its association with weddings and other significant life events.
• 17:30 - 21:00: Liquidity and Final Thoughts In this chapter, the discussion revolves around the complexity involved in choosing between different gold investment options such as mutual funds, ETFs, and S gold B. The speaker acknowledges that simplicity was the goal, but the complexity of these financial instruments has presented challenges. To address these complexities in investment decisions, the speaker proposes a methodical approach: comparing the pros and cons of each option through an engaging activity. This activity involves reviewing a chart and marking each investment type with either a red flag or green flag. The option with the most green flags will be the preferred investment choice.

Your family GOLD is NOT Valuable.! Transcription

• 00:00 - 00:30 sir not right now I'm working sir look sir not right now I'm working sir you told me to invest in gold so I invested look very nice very nice what you know you look like JY Larry this is not working and I think you should figure out all the different ways you can invest in gold this is not the only way by the way we figure it out with someone else okay I don't want to talk to anybody else especially abish he just shouts at me please you tell me no you figure it out with him I I can't sit and figure things out with you all the time it's what I can give you what is
• 00:30 - 01:00 this 22 karat you think I can be bribed like this we'll spend 10 minutes together and I will figure out the different kinds of gold and hopefully help you out Cool [Music] Works before we start talking about all the different ways you can invest in gold you tell me what do you understand about gold what do you think my mom says gold is amazing you should invest in it what do you think I like silver more though diamonds but gold is nice the
• 01:00 - 01:30 gold standard used to exist before and then we mve to money and it inherently has value but people perceive that it has value so in times of um desperation when an economic downturn happens or hyperinflation happens or any of these bad things happen in an extreme environment in an economic condition gold is where everyone runs to it's your safe heaven so thinking of gold as an investment perhaps you should change us a little bit think of gold as a hedge it's a cushion and as a cushion it's
• 01:30 - 02:00 good because it's unlikely to lose a lot of value like Equity could or any other asset could so backup it's like a yeah it's like a safety net but how much do you think gold has given a return over the last many years give a guess 10 yeah it's actually not bad 9 and 9 something per for the last 40 years which is not bad considering it's a safe heaven for many people because they think gold is gold so as a hedge also so and as a
• 02:00 - 02:30 value of an investment which goes up over a period of time not bad so apart from fds if there's something that parents keep on talking about it's gold so what's the whole fuss about why do you think our parents talk about gold so much returns and do you think they love weddings I I love weddings it's interesting it's actually a in being Indian mhm 11 to 12% of all the gold in the world is owned by Indian households so if not physical gold I can get into digital gold that's enough but then we
• 02:30 - 03:00 have gold mutual fund also we have ETF also we have S gold B also wasn't all of this supposed to be very simple why do you keep complicating it I'll be honest I do think it's a little complicated so what's an easy way to figure this out you tell me what to invest in I'll invest no what we'll do is we'll quickly go through all of the types we'll do the pros and cons but that's really boring so we'll do it like this I'm going to give you chart you're going to put red flag green flag based on what seems nice the one which has the the most green is
• 03:00 - 03:30 good for you the one which has the most red is not good I just have to guess no I'll give you the information you can ask questions and we'll keep it super simple quiz time yes and if you don't want to watch this you can skip to the end to see which wins but that would be cheating instead you should pause and tell me which one do you think works and I'll magically get a spreadsheet on it very nice this is a physical version of that spreadsh and this is green flag so here's what we'll do option one we can
• 03:30 - 04:00 go through each of these items in full detail spending 5 minutes each to understand accessibility risk the cost the liquidity and make a 1 hour long video does that sound good no I don't have the time we don't have the time we'll finish this really quickly and I'm going to first explain each of this so physical gold is what gold digital gold is what digital gold it's digital gold so you don't really possess it but you own something which represents a physical gold placed somewhere and you can actually take POS verion of it if
• 04:00 - 04:30 you like H so it's 99.9% Purity gold ETF uh you can get them through a broking app yeah correct so you open a broking app it's listed you can buy it and it's easy then you have gold mutual fund which is just like an equity mutual fund which invests in Gold ETFs only but they mix like one or two or three different ETFs and they basically it's a fund but there's a professional fund manager sitting behind it also that's nice and then it's sgb what's that no idea sgb sovereign gold bonds Sovereign means
• 04:30 - 05:00 from the government of India bonds means it's debt so the government is essentially taking a loan from you in exchange to give you a return uh which is which I'll explain later and uh they basically price it at the price of gold okay so it's not actually backed by gold but because it's guaranteed by the government uh it's fine so sgb so it tracks gold basically now you tell me is accessibility wise
• 05:00 - 05:30 rate it red flag green flag green because you can just buy it from any Shop digital gold green okay because you can just buy it from an app gold ETF green buy it from a broking app gold mutual fund buy it from some mutual fund app sgb you can ask me if you don't know where can you buy this so sgbs are not available all the time
• 05:30 - 06:00 they have a duration where they're available you go bid and you take it and then they're not available for a period like right now at the time of shooting this there is no sgb available because the government hasn't made it available oh so it's not as accessible here so yeah okay red red flag got it all right so now let's talk about uh the risks so let's see physical gold the risks are what it get stolen so digital gold actually perfectly fine the only
• 06:00 - 06:30 slight risk here is that it's not regulated by RBI and sebi as much right now so it's going to be a 3D flag yeah it's a little bit of both it's Medium as far as I know there have not been issues with it so far but little since you're talking about risk with gold ETF the prices move there could be a liquidity issues which means if there's no buyer or seller on the other side you won't be able to trade it so that's sort of like a little bit risk apart from that um it's actually all right so and gold mutual fund is the
• 06:30 - 07:00 same thing because it's investing right here so I mean so longterm not really that risky is it just like at one day if you want to take it out and you have no you can yeah and then we have sgbs the risk with sgbs are actually uh nil when it comes to tracking gold or anything okay now we'll move on to the next option which is minimum investment gold price right now I bought this so I'm 73,000 R
• 07:00 - 07:30 per 10 G is what it costs 73,000 rupes for 10 G Plus other costs so I would say physical gold the minimum would be the highest so I'd say red I say red okay yeah fine you say digital gold is the simplest uh bunch of people are investing online and they are able to back it with actual gold somewhere so they accept even one rupee as uh an investment so that's easily the minimum so it's green so minimum investment in
• 07:30 - 08:00 Gold ETF is like one unit one unit is about 70 75 rupes that's not bad it's not bad so I think it's I think it's great also one thing about physical gold that we didn't cover is that people do buy 1 G 5 G unless the jewelry shop forces you and says but yeah so but I don't know if you want to keep that green and red also gold mutual funds are the same as gold ETS they have an nav this could be say
• 08:00 - 08:30 100 rupees affordable yeah sgbs is a minimum of 1 G which is about 7,300 7,500 so you need to decide what you think about oh really but 7,000 is okay no no okay fine cool let's start with costs now but gold is gold it's going to be the same it should right yeah the cost of gold is gold
• 08:30 - 09:00 and then it should be the same for physical gold yes digital gold and traded gold correct yeah but let's figure this out physical gold me you have to go to a shop and buy so they charge a you know this making cost making charge so that's about let's say 7 to 12% that's true 7 to 12% I'll say it again 7 to 12% that is very high that's pretty high there is GST so the GST takes away another 3 % now all this gold you will
• 09:00 - 09:30 keep in your drawing room right Locker you keep Locker so the locker will charge something so it is a cost right yeah and it's a recurring cost so you're paying every year the next we have digital gold I can see over here that we have 3% GST charged okay and then with the app that you buy it from keeps a spread between the actual cost of gold and what it's selling to you it's allowed and that spread is what they uh charge is different for everyone so
• 09:30 - 10:00 let's say it's 3% okay so they have 3% plus 3% 6% is what your you're paying then we have gold ETF now gold ETF charges an expense ratio okay this is 5% to 75% so far that's the lowest with gold mutual funds it's roughly the same about5 to 75% now of course apart from this there'll be demat charges there'll be some brokerage you'll pay bare minimum
• 10:00 - 10:30 but those are costs let's talk about sgbs sgbs there is no expense ratio you buy it directly um in fact the government gives you 2 and 1 half% because every bond has a coupon it gives you 2 and a half% every year on that and it tracks gold so the same as Gold Plus 2.5 yeah and then you pay the dmat charges because you hold it in a DM account and actually that's it so what do you think physical gold physical gold uh what was it huh making charges crazy all taxes digital gold was 6% I
• 10:30 - 11:00 remember so I'd say I'd mark it like a green and red both okay cuz like and then gold ETF was like really less point5 to plus generally 5% yeah same goes here and this also like plus only so over here sgb wins clearly and then we have finally liquidity so we have
• 11:00 - 11:30 liquidity for physical gold very simple you go to a shop and you say you're able to buy it so is it liquid yes do you get the best price questionable so I would still say green can you sell it easily yes you can Fair digital gold is the most liquid you can do this immediately and the money also comes back immediately so this is green green gold ETF um is also fine but some gold ETFs actually have liquidity issues which means there are less people buying and
• 11:30 - 12:00 selling oh so you may not get the best price so I would say it's not that bad but yeah maybe like a maybe like a moderate 3D is the new moderate 3D is the new moderate and then you have um gold mutual funds so I think this would also be 3D but it'll be decided on a nav so that's why the fund manager exists to manage this and then you have sgbs the thing with sgbs is let's say it's a 8e long
• 12:00 - 12:30 Bond you will actually exit once it matures so I would say red red FL yeah so if you wait to mature then it's fine but yeah so that's it so what are you going to pick I think over here I might go for either gold ETF or gold mutual fund so Tanya why are you doing all this to get rich correct I think everyone wants to buy gold eventually they have enough gold so they feel rich it's like Uncle Scrooge who used to dive inside
• 12:30 - 13:00 this huge wall full of coins and actually take his morning bath in it because it made him feel secure made him feel and I'm okay but that entire episode of DuckTales which is a long time ago was about him spending time with his grandchildren going to exotic places solving things and then coming back and enjoying some drinks with him mocktails only so maybe the wealth was not those coins maybe it was something else I wonder what you think which of
• 13:00 - 13:30 these modes makes sense and do you even think gold makes sense tell us in the comments below say something nice and see you in the next shorts [Music]