A beginner’s guide on Gold Mutual Funds in India
Since times immemorial, gold has been an asset used to trade commodities. Owning gold was a symbol of wealth. Today, the market offers several investment options that let you purchase gold in various forms, including gold jewellery, gold coins, e-gold and Gold Mutual Funds. This article is a beginner’s guide on Gold Mutual Funds, how it works and their many benefits.
Gold Mutual Funds are types of Mutual Fund investments that invest in gold bullion, i.e., physical gold coins and bars, without you having to buy gold physically. Gold prices tend to rise during falling markets, making Gold Funds an ideal addition to your investment portfolio.
Gold Funds in India invests the pool of money in Gold Exchange-Traded Funds (ETFs). A type of Fund of Funds (FOF), Fund Managers actively manage Gold Mutual Funds. A single unit of Gold Mutual Funds is equivalent to 1 gram of physical Gold. Investors typically increase their Gold Fund investments during bearish market trends.
The gold sector is inversely proportional to the equity market, i.e., when the market falls, gold prices increase. Therefore, the best Gold Mutual Funds serve as excellent protection against market downfalls. Gold is also an ideal investment vehicle if you aim to beat inflation.
If you compare physical gold and Gold Mutual Funds, the latter is more affordable. You can buy gold funds with investment amounts as low as INR 500. Plus, you do not pay making charges as you would to gold jewellers.
Gold Mutual Funds in India are electronic investments wherein physical gold units are stored in highly secure vaults. Thus, you need not worry about storing or thefts associated with physical gold. Moreover, you can use Gold Mutual Funds as collateral for loans.
Gold jewellery is typically not 100% pure. It contains other elements to stabilise the gold. Fund Managers buy gold units of only bullion of the maximum purity, certified by the World Gold Council.
Gold Mutual Funds are one of the safest modes of investing in gold without bearing the many costs associated with physical gold. If you are looking for ways to invest in inflation-proof instruments, Gold Mutual Funds are for you.
Download digibank to explore the different mutual funds on offer and even open your savings account with us.
*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.