GOLD MUTUAL FUNDS: YOU CAN MAKE YOUR INVESTMENTS SIMPLE

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From the ages, gold has been used to buy jewellery, coins, bars, etc. By that time it could be more challenging to keep them as investments.

Everyone gets confused about how can invest in gold without any stress of storing and managing it because there are so many ways of investing money.

Here is the solution, Experts have Gold Mutual Funds through which they invest gold in such a way that investors get extensive capital gain.

Let’s get connected to Gold MFs to know more about it.

What are Gold Mutual Funds?

Gold Funds are the type of mutual fund that directly and indirectly invests in gold and related assets with the return of investment like other funds.

Gold funds are open-ended funds. You can easily go through the investments and have a precise investment rate because gold always has a high upturn.

The rate value of investments in the assets related to Gold MFs depends on the prices of such precious metals that go with the market flow.

It can be used as a hedging technique to prevent investors from economic or financial crises.

Moving forward to comprehend more about gold funds and how one can invest in it, how it work. Let’s begin the analysis by understanding how this mutual fund category works.

How Gold Mutual Funds Works?

As introduced above, Gold Funds are open-ended funds in which experts invest and manage your money as well with no such restriction of a minimum amount.

A separate account is not needed here, one can have a standard savings account or a Demat account.

There are different methodologies for investing in gold mutual funds, such as Gold ETFs (exchange-traded funds) and sovereign gold bonds.

  1. Gold ETFs (Exchanged Traded Funds)
  • Theseare something similar to buying physical gold but stored in the form of a Demat(paper) that you don’t need to hassle storing it like physical gold.  
  • You can make investments by opening a demat account and buying a proportionate amount of gold, but not in physical form.
  • The gold price depends on Gold ETFs.
  1. Gold Funds
  • Theseare used to deal with investment in gold mining companies. There is no need to have an account for the investments like this.
  • The changes in gold prices don’t affect the Gold ETFs.
  • Documentation or paperwork is also included in the consideration.  
  • Minimum charges are included to manage the funds and investments.
  1. Sovereign Gold Bonds
  • These are related to digital Gold that is officially issued by the Reserve Bank of India (RBI).
  • The unit of gold in grams as one gram influences the bonds. The investment is assured with an interest rate of 2.50% per annum.
  • The sovereign gold bond scheme has a holding period of 8 years with prematurity permissible from the 5th
  • This is an ideal choice for those who want a long-term investment scheme with high capital gain.

If you want to know more about gold schemes, this analysis shows you what is the purpose of investing in gold schemes.

Why should invest in gold as a fund?

Gold is viewed as a way to diversify portfolios and act as an inflation hedge.

Due to high liquidity gold can be invested as a mutual fund. Liquidating gold is much easier than liquidating other assets.

It can be liquidated within a short period of notice without so much hassle.

It can be an ideal approach to invest in gold funds for those who are looking for low-risk investments.

You can also save on taxes by opting to invest in gold-related schemes because TDS is not applicable to such types of investments.

Further looking at gold mutual funds, let’s have a look at its advantages.

Advantages  of Gold Mutual Funds

Here are some common advantages of gold mutual funds that brings you closer to it:

  • Diversification:There are different portfolios to invest in gold like Gold bullion, gold mining stocks, gold fund schemes, bonds, and digital gold as well. This feature works as a diversification in portfolios of Gold Mutual Funds.
  • Liquidity: The high liquidity of gold makes it easy to buy and sell without much difficulty as in physical gold. This feature makes it an ideal safeguard that protects against financial crises.
  • Accessibility: These mutual funds are accessible not only the large investors but also to small investors, who are willing to invest an amount as low as Rs. 100/-.
  • Professional Management: As the MFs are controlled by expertise the investors don’t need to go through the hassle of buying, storing, and managing the funds. Investors benefit from the knowledge of professional managers as they monitor market trends and imply strategies for better performance of the related schemes.
  • Security:Gold MFs are digital investments that are much more secure to store, unlike physical gold. Also, these funds are monitored by the Securities and Exchange Board of India(SEBI).

From the analysis, here is the summary that will conclude about Gold MFs.

Final Note

Last but not least, investing in gold schemes will be a better approach for future savings purposes. It becomes a habit of an individual to save every month via SIP (systematic investment plan). This will help to learn about financial investments.

Rahulsharma234

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