💰Gold ETF vs Gold Funds | Which is More profitable investment? LLA GOLD Ep#3 Financial Advice

Summary

In this video, Sandeep explains two popular ways of investing in gold: Gold ETFs and Gold Funds. He discusses the differences between these options, comparing their advantages and disadvantages. Key points include the ease of investing through demat accounts or mutual fund apps, the potential for lower expense ratios in Gold ETFs, and the flexibility of SIPs in Gold Funds. Sandeep highlights the importance of investing in gold as a safeguard against stock market volatility and offers tips on how to select the right ETF or fund based on asset management. Ultimately, viewers are encouraged to choose the method that best fits their financial goals.

Takeaways

• 😀 Gold ETFs and Gold Funds are two popular ways to invest in gold, offering different methods for purchasing and managing investments.
• 😀 Gold ETFs are purchased through a Demat account, while Gold Funds can be bought via a mutual fund app.
• 😀 Gold ETFs typically offer a lower expense ratio than Gold Funds, but they may require a higher minimum investment and are subject to brokerage fees.
• 😀 Gold Funds allow for smaller investments starting at ₹500 and can be managed through SIPs (Systematic Investment Plans).
• 😀 Gold ETFs do not charge an exit load, meaning you can sell them anytime without additional costs, unlike Gold Funds that may charge an exit load if sold before 1 year.
• 😀 Both Gold ETFs and Gold Funds are taxed similarly. Short-term capital gains tax applies if sold before 3 years, and long-term capital gains tax applies if held for longer.
• 😀 In Gold ETFs, you can request physical delivery of gold if you own enough units (typically around 1 kg), whereas Gold Funds do not offer this option.
• 😀 Digital Gold carries additional costs, such as a 3% GST during purchase and similar fees when selling, making Gold ETFs and Gold Funds more cost-effective alternatives.
• 😀 Gold ETFs generally have lower overall costs compared to Gold Funds due to the absence of exit loads and lower expense ratios.
• 😀 When selecting a Gold ETF, it is important to check the asset under management (AUM) to ensure liquidity and ease of selling. Larger AUMs indicate better liquidity.
• 😀 HDFC Gold Fund is a good example of a Gold Fund with a low expense ratio (0.29%), and AnyPorn Gold ETF is a popular choice for investors due to its large asset management of ₹2290 crores.

Q & A

What is the main topic discussed in the video?

The main topic is about two ways of investing in gold: Gold ETFs and Gold Funds. The video compares these two investment options, highlighting their differences, advantages, and how they are better than digital gold.

Why is investing in gold important, especially during a stock market crash?

Investing in gold can serve as a safety net during stock market crashes. If the stock market crashes and your equity investments lose value, gold prices often increase, which can help fulfill your financial needs by selling gold investments.

What is a Gold ETF?

A Gold ETF (Exchange Traded Fund) is a type of mutual fund that invests in gold. It is traded on the stock exchange and can be bought or sold through a Demat account like a regular share.

How does a Gold Fund differ from a Gold ETF?

A Gold Fund is a mutual fund that directly invests in gold through a mutual fund app, while a Gold ETF is bought and sold through a Demat account. Gold Funds are often easier to invest in with lower minimum investments.

What are the advantages of investing in Gold Funds over Digital Gold?

Gold Funds have lower transaction costs compared to Digital Gold, which comes with a 3% GST charge and a 3% loss when selling. Gold Funds generally have lower expense ratios and provide better returns with fewer hidden costs.

Can I purchase physical gold using Gold ETFs or Gold Funds?

Gold ETFs allow physical delivery if you hold a minimum of 1 kilogram of gold, while Gold Funds do not provide the option for physical delivery.

What are the tax implications of selling Gold ETFs or Gold Funds?

If sold before 3 years, both Gold ETFs and Gold Funds are subject to short-term capital gains tax. If held for more than 3 years, long-term capital gains tax of 20% applies, with an additional 4% cess.

What are the expense ratios in Gold ETFs and Gold Funds?

Gold Funds tend to have higher expense ratios compared to Gold ETFs. While some Gold Funds may have expense ratios as high as 1.5%, Gold ETFs generally have lower fees, sometimes around 1%. However, certain Gold Funds, like HDFC Gold Fund, can have much lower expense ratios.

Can I invest in Gold ETFs and Gold Funds through SIP?

You can invest in Gold Funds through SIP (Systematic Investment Plan) via a mutual fund app. However, Gold ETFs cannot be invested in through SIPs, as they require purchase through a Demat account.

What is the minimum investment required for Gold ETFs and Gold Funds?

For Gold ETFs, the minimum investment may be as low as 1 gram of gold, depending on the ETF. For Gold Funds, the minimum investment can start from ₹500, making them more accessible for smaller investors.