Investors should keep in mind their financial goals and risk-taking ability while making investment decisions.
Gold is a precious metal. It has been used since ancient times to make currency and jewellery. People have been using it to raise wealth. In our country, people often keep gold as an asset. Gold is seen as a symbol of wealth and heritage which remains for the next generation after one generation. Many stories related to this precious metal are heard. People like gold not only as an asset but also as jewellery. It is considered a better investment option.
There are many benefits of investing in gold. The biggest advantage is that the investor’s money is safe. Investing in gold diversifies the investment portfolio. It is easy to raise funds in exchange for gold in an emergency. You can buy gold and invest in it. Apart from this, there are other options for investing in gold. One of which is Gold Mutual Fund. This is a digital form of gold. Which is also called paper gold.
If you want to benefit from investing your savings in gold but are confused whether it would be better to invest in physical gold or gold mutual funds, then you can take a decision by looking at the features of both the investment options here.
Physical Gold
Investing in physical gold means buying biscuits, coins, ornaments or jewellery made of gold. If you are planning to invest in physical gold, then understand about it.
Liquidity and assets
Physical gold is an asset that remains with you in the form of biscuits, coins, ornaments or jewellery. You can use it as per your wish. Secondly, in case of liquidity and emergency, you can easily raise money in exchange of gold kept at home and jewellery made from it. To meet financial needs, you can arrange funds through gold loan by mortgaging gold in the bank. However, the purity of gold, design of jewellery and current market value matter a lot in this.
Storage and Purity
Nowadays, we hear news of gold chains being snatched on the road every day. Many such cases also come to light in which jewellery worth lakhs and crores of rupees is stolen. In such a situation, measures have to be taken to keep physical gold safe. Many people use bank lockers to protect it. Money has to be spent for this facility of the bank.
It is important to ensure the purity of physical gold, especially when buying jewellery or coins. To avoid fake or low-purity gold jewellery, investors should buy from a trusted shop. Also, check the hallmark.
Price includes making charges and GST
The price of physical gold includes making charges, GST and others. The price of gold jewellery may vary depending on the seller. In such a situation, before buying physical gold, buyers should visit different shops and get information about the prices and then compare them and decide to buy.
Gold Mutual Funds
Gold Mutual Fund is the digital form of gold. In this form, gold is also known as Gold Exchange Traded Fund (Gold ETF) or Gold Fund. Apart from physical gold, Gold Mutual Fund is an easy way to invest in gold. However, investors should know about these things before investing in it.
How to invest
Investors invest directly in physical gold, whereas in gold mutual funds, investors invest indirectly in physical gold bullion and these are managed by fund managers. In this, investors have to buy fund units.
Diversification
Buying a gold fund diversifies the portfolio of investors. In this, investors invest in a basket of gold assets. With this type of investment, the risk of theft or snatching is reduced like physical gold.
Liquidity and transparency
Gold mutual fund units can be bought and sold on stock exchanges like any other mutual fund or stock, providing liquidity and transparency.
Managed at lower cost
Compared to physical gold, gold mutual funds usually have lower transaction costs. Also, there is no hassle of maintenance and insurance expenses. Fund managers keep an eye on market trends and take investment decisions on behalf of investors. In such a situation, there is a possibility of getting higher returns on investment in gold mutual funds.
