Gold Mutual Funds: Advantages

Gold Mutual Funds are ideal for people who want to play safe in the world of financial market, and finance.

It is regulated by the SEBI(Securities and Exchange Board of India), which lowers the risk associated with investing in a mutual fund(mutual funds are subjected to market risk….Remember the commercials?).

The fund is invested into gold bullions, a physical asset that is mostly independent of fluctuating financial markets. That makes it suitable for prudent investors as well.

Investors looking to save on taxes can also plump for gold funds. Only the taxes applicable to buying and selling jewellery are imposed on these funds.

Major Advantages

There are several advantages of investing in gold mutual funds in India. Let’s take a look.

  • Flexible investment amount – Gold funds offer greater convenience than physical gold as it allows an investor to purchase any amount of funds as per their requirement. One can invest as low as Rs. 500, which allows individuals with low income to invest in this type of funds. Instead of purchasing physical gold, which often carries a significantly high cost, it offers more flexibility to an investor. So, it’s a pocket friendly mutual fund.
  • Highly liquid investment – Another major advantage of a gold mutual fund is that it can be liquidated in short notice and without much hassle. Trading these funds is easier than liquidating other types of assets, which makes them ideal as a financial seat belt to protect against an unforeseen incident. Also, there is no lower limit on redeemable amounts, allowing an individual to redeem according to their unique financial requirement.
  • Safe investment avenue – Gold funds are one of the safest investment options, as these mutual funds are regulated by the Securities and Exchange Board of India (SEBI). SEBI periodically monitors and reports on the condition of these funds, which can help investors measure and predict their returns.
  • Diversify investment portfolio – Gold mutual funds are an excellent investment option to diversify one’s investment portfolio and reduce overall market risk. As a physical asset, gold prices are not directly related to company stocks.
  • Safer than owning physical gold – Gold funds are electronic investments, which eliminate the hassle of storing physical gold. Because of its dematerialisation form, it is one of the safest and most liquid alternatives to investing in a physical asset available in today’s market.
  • Introduces investment discipline – These funds help new investors learn about the crucial disciplines of investment. Investing in gold through SIP(Systematic Investment Plan) requires an individual to put a particular amount in these funds every month, which introduces the habit of saving. Investors can also learn financial discipline by investing in these funds for long or short-terms.

Your minds must have turned gold after knowing such amazing advantages of gold mutual funds. But, it’s always better to be safe and then play in the financial playground. Learn more about the finance market, take consultation from the professionals, and remember….mutual funds are subjected to market risk, please read all the documents carefully. All the best for this gold quest!

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