Why Gold Mutual Funds are one of the most convenient ways to invest & accumulate Gold as an asset cl

Gold has always had its charm, both for males and females. While females mostly value the adornment value of gold, males mostly see gold as an investment avenue. Buying gold, therefore, is quite stressed upon specific festivities and also as a means to create assets. Buying physical gold, however, has its challenges. You need substantial funds to invest in physical gold and it also poses the problem of easy liquidity. What if you can, instead, invest in gold in digital or paper form?

Gold mutual funds are a way of investing in gold in the digital or paper form. Gold mutual funds are a type of fund or fund which invest in Gold ETFs (Exchange Traded Funds). Gold ETFs, on the other hand, invest in physical gold. Therefore, through gold mutual funds, you can indirectly invest in physical gold in liquid form.

Benefits of gold mutual funds

Gold mutual funds prove to be quite beneficial over buying physical gold. Here are the reasons why –

• Ease of investment

When you buy gold mutual funds you can start your investments with as little as INR 500 by choosing SIPs. Such a small investment amount allows you to easily invest in gold which would have otherwise required considerable funds. You can buy gold mutual funds online or offline and the process is simple and quick.

• Safety

Physical gold is prone to theft and robbery but when you invest in gold mutual funds, you get gold in digital or paper format. Storing gold in this form is safe and protected from the chances of theft. Gold ETFs, on the other hand, maintain secured custody of physical gold which minimizes the threat of theft.

• Liquidity

It is very easy to sell and buy gold mutual funds. You can choose to redeem all or a portion of your investment as per your financial need and the mutual fund house would credit the funds at the earliest. Redemption of gold mutual funds can be done online which speeds up the process further. Selling physical gold, on the other hand, might prove to be a challenge that makes physical gold less liquid than gold mutual funds.

• Cost-effective

Gold mutual funds have no making charges or melting charges of gold added to the cost of gold. The NAV of the fund depends on the value of the gold ETFs into which the fund has invested. Gold mutual funds are, therefore, cost-effective in nature.

• A hedging tool

Gold mutual funds act as the perfect hedging tool in times of market volatility. The price of gold does not fluctuate wildly and so in a bearish market, you can invest in gold mutual funds to beat the market volatility and get moderate returns on your investments. Even when the inflationary trend is rising, the prices of gold remain unaffected and so you can use your gold mutual funds to hedge against inflation.

• Portfolio diversification

Gold mutual funds are an ideal way to diversify your portfolio if you want a little debt exposure. In fact, in falling markets, investing in gold mutual funds is a good solution to prevent capital erosion.

Gold mutual funds, therefore, are an ideal investment avenue if you want to buy gold. You can invest in affordable amounts, buy and sell them at your preference, and even store them safely. Moreover, if you choose top gold mutual fund providers, you can even earn good returns. So, compare the quantitative and qualitative returns of top gold mutual fund providers and then choose the scheme with the best returns if you want to invest in gold.

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