Friends, if I talk about gold and how much returns gold gave in the past year then you will be shocked to hear Gold, in the past year has given a return of more than 25% if I talk until August There, if I talk about NIFTY 50 Then NIFTY 50 in the past year has given a return of around 15% So on hearing this you must feel that instead of in equity we should invest in gold And what are the advantages and disadvantages of investing in gold And when we compare gold and equity Which investment option is more lucrative I, Jagdeep Singh, welcome you to the Groww channel Today we will talk about gold investment and along with that about equity investment And we will compare, as a retail investor Like you and I, where should we invest And should we invest in gold and if we do then how much should we invest And what are the advantages and disadvantages of investing in gold If I talk about gold then we, Indians, are very associated with gold If I go back a few years Then gold was used in the form of currency When someone wanted to buy something then used to use gold currency But after that the coins changed But gold continued to be an investment option for us Indians So we, Indians always think that when we have some extra money Then we should invest all that money in gold Because whenever you have a problem in your life then you can sell that gold And get some money by which you can get rid of your problems But after that there were a lot of investment options that came in the market After which, people started thinking that if they invest in other options other than gold Then we can get more and better returns So if I talk about gold then there are mainly two benefits of investing in gold Firstly That if gold’s prices increase then you will get returns Secondly, in India we use gold in a lot of jewellery So at one time this fulfils two conditions Because of which this becomes a preferred way of investment In which a lot of Indians prefer to invest Now after gold I will talk about equity In equity comes the share market and mutual fund Because a lot of mutual fund invest in equity So the biggest difference between them is that, gold Is a traditional asset base in which we have been investing till now If I talk about equity and mutual fund It is a modern way of investing Where people nowadays are planning on investing in And a lot of people have started investing as well If I talk short term Then in the past year gold has outperformed equity But if we think about investing in equity for a long term Like I always say that if you want to invest in equity, it should be for a minimum of 5 years So if you look at five year returns Then the return of equity always comes out to be more than gold Apart from this the biggest difference between gold and equity is that whenever you invest in equity Whenever you invest in any share Then the value of the share is derived from a company The company that is operational, the company that runs its business And that company’s business earns its money for them And whenever the company’s business expands Whenever the company’s profit increases Whenever the company’s sales increases, its share price increases Which means by investing in equity, your value is derived from a business Which is a running business In the same way when you invest in gold Then gold acts as a commodity And it doesn’t derive its value from any business It is a commodity And the way its price goes up and down is because of demand and supply So gold is a commodity Whose price goes up and down on the basis of demand and supply When its demand is high and supply is low its price goes up Then from there you get a return as an investor But if I talk about equity Equity’s entire value is derived from a company And its price goes up when its business performs well So the benefit of investing in equity is that That when you research very well When you study a business very well And you think that the business will perform really well in the coming time And when the business goes well, you will get really good returns But in gold to be able to guess as retail investor How demand and supple will behave in the coming time It is very difficult So now you would’ve understood what the basic difference of investing in gold and equity are Now you must be thinking that I always tell you that you should invest in equity or mutual funds So why am I telling you that you should sometimes make a little investment in gold as well So what are the benefits of investing in gold For an equity investor So here I will give you a different perspective What are the benefits of investing in gold for an equity investor So whenever you invest in equity or debt mutual funds Or you directly invest in equity Then there is a lot of risk that the market can go down at anytime So if I talk about equity and gold Whenever the share market goes down then the price of gold goes up And whenever the share market goes very high Then the price of gold goes down a little not a lot So here there is a term which is called hedging Which is used a lot in the industry If I talk about hedging then it is a technique that reduces your risk Like if you keep your entire portfolio in equity And someday something happens in the market and it goes down And you face an emergency that you require money At that time if you sell your equity, you have to seel it with a lot of discount But here if you would’ve done hedging If, here, an equity investor invested 5% of his portfolio in gold I won’t say that you should buy physical gold You can invest in gold mutual fund, gold ETF or anywhere else But just 5% investment if you would’ve done in that If an emergency comes up and the share market goes down In that case, the prices of gold goes up And if you have to liquidate your position Then in that case you can liquidate your position in gold The benefit of which will be that you will get some money in the case of contingency And that money will come from an asset that, at that time, has gone up. And the second benefit you will from there is that That in the case of contingency you will not have to sell your equity investments Because in that case the share market will be down If you have to dilute the equities Then you will have to dilute the equities with a lot of discount Then here gold can help your portfolio in hedging really well And this hedge can help a lot in the coming time And this can help you diversify your portfolio as well So if you are an investor then you should plan Where your investments should be Like some of your investment can be in equity A little can be in debt And some of your investment can be in gold as well It is not necessary that it has to be in the physical form but if you keep it in the form of ETF Then your overall portfolio will be hedged by gold Then here as an investor you should decide yourself how much of your investment should be in equity How much should be in debt and how much in gold If I talk about the 100% principle and you are 30 years old Then what you can do is, invest 28% in debt Invest 67% in equity The remaining 5% can be invested in gold And that 5% that is invested in gold can help you in hedging And in the coming time, in the case of contingency you can use it Let us talk about the last and very important question That how ca we, as retail investors invest in gold So I will tell you 4 ways through which you can invest in gold First, physical gold You can go to a shop and buy physical gold and keep it And that has its benefits and its drawbacks The benefit of buying physcial gold is that That in the coming time if you find the need to make jewellery Then you can use that gold and make jewellery On that you will only have the cost of making it Apart from that the only drawback of buying physical gold is that That you have to pay attention and keep it safe If you buy physical gold and keep it at your house, it can be stolen So you have to give extra care in the case of physical gold The second way of investing in gold is investing through mutual fund Like there are some gold mutual funds If you invest in them, they go ahead and invest in gold So if gold has a capital appreciation The price of gold goes up then you get that much returns The third way of investing in gold is gold ETF You can invest in gold ETF by going through a broker And gold ETF trades in the share market like normal gold And here the liquidity is also very good Which means that you can buy and sell this at anytime If I talk about expenses then the expenses are lesser in the case of gold ETF as compared to gold mutual fund The fourth and last way through which you can invest in gold is through gold bonds Gold bonds is normally launched by RBI Gold bonds were first launched in 2016 in India You can directly invest in gold bonds through banks or brokers And here the benefit of investing is that That along with capital appreciation you often get interest And the interest is around 2-2.5% So I will come back to the first question Should equity investors invest in gold? You should invest in gold but in a very small proportion According to you overall portfolio And first you should gauge your risk about how much risk you want to take Because gold is mainly for those people who do not want to take any risk But in the coming time if you want a lot of growth You want to make a lot of money through the equity market Then it is good that you invest in the equity market But along with that a small part of your portfolio You should keep in gold Because whenever something goes wrong in the equity market Then that gold acts as a hedge and doesn’t let your overall portfolio go very down And after that you can sell the gold and suppose the entire market goes down In that case the price of gold goes up And then if you sell the gold and invest that money in the equity market Then in the longer horizon you can make more money So I will end this video with a question for you Do you invest in gold? If you do, then in what way do you prefer to invest in gold? And according to you how much percentage of our overall portfolio should we invest in gold? And you can also comment down below and let us know what topics we should cover in the coming videos If you liked this video, press that like button. Comment down below And if you haven’t yet subscribed to this channel, then please subscribe Because we put up 3-4 videos every week on this channel on financial knowledge Which can help you be a good and an intelligent investor Happy investing!