Gold investment in India has always been an attractive portfolio, thanks to its high liquidity value and inflation-beating capability. On the other hand mutual fund is an excellent investment option for freshers as a skilled and experienced money manager operate them on behalf of traders.
If we compare gold vs mutual funds, then we can see both these investment schemes have their own set of pros and cons. While gold acts as a safe haven for investors, mutual funds are also preferred by many traders thanks to its risk-mitigating qualities.
If you are not sure about the different properties of gold investment or mutual funds please read the following first:
Once you have a basic understanding of gold and mutual fund investment let us have a look at these two popular investment options.
|Characteristics||Gold Investments||Mutual Funds|
|Category||Gold acts as an asset as well as investment.||Mutual funds are solely for investment purposes.|
|Management||The investor can manage gold investment solely under his discretion.||The financial managers professionally handle mutual funds.|
|Risk Involved||If you handle physical gold in the form of coins or jewellery, there is a risk of storing them due to theft and burglary. However, if you decide to invest in Gold ETFs and FoFs, then there is no such risk of maintaining these bonds.||Since you can buy and sell mutual funds online, there is no risk involved in storing and maintaining them.|
|Strategy||You can choose between gold ETFs and Gold FoFs. However, both of them belong to the same category of investment. There is no diversification possible in this investment profile.||Mutual funds include a vast range of diversification of portfolios. You can select the ideal category of bonds based on your preferential domain, market risks, and investment budget.|
|Trading||There are no charges or intermediaries involved in buying and selling of gold.||Investors require documentation, intermediaries, entry and exit charges when they decide to trade in mutual funds.|
|Returns||Investors do not earn any dividends through gold investments. Also gold may not give you exceptional returns over a longer tenure and people choose to redeem in a shorter period.||Mutual funds are available both in bull and bear market. Investors can earn a substantial return according to the performance of the profile.|
|Liquidity||Gold has high liquidity value. You can trade it anywhere and with any interested person.||Mutual funds also fare well in liquidity aspect. You can redeem these funds and earn the Net Asset Value anytime.|
|Investment Cost||If you wish to invest in physical gold, then you require a lump sum amount as an initial investment. However, selecting the SIP plans of Gold ETFs, you can enter the market with a minimal investment.||Mutual funds are quite affordable. You can enter the market with as low as Rs 1000 as the initial investment. You need to select the number of mutual fund units according to your budget.|
|Market Knowledge||Investors do not require to be an expert about market trends to trade in gold.||Since financial managers professionally handle mutual funds profile, limited knowledge about the market will help you invest in these portfolios.|
|Stability||Gold is quite stable and has an inflation-beating capability. Despite minor fluctuations in its pricing, traders usually make a profit in the long run.||Mutual funds are a dynamic profile. So, there are chances of making losses in a declining market.|
Now that you have understood the difference between gold and mutual fund investment build your portfolio as per your risk appetite and financial goals.