Home » Why Investing in Gold Funds is a Good Idea

Why Investing in Gold Funds is a Good Idea

Gold mutual funds (GMFs) are a class of mutual funds that invests the collected corpus in gold exchange-traded funds (ETFs).

These are a type of investment scheme that aims to track the movement of gold prices in the domestic market.  So investing in these funds is a little more involved process than just searching gold rate today Vishakhapatnam and then making the purchase. You should be aware of several factors before you invest in gold funds more so because it is a newer concept than buying gold bullion.

However, they are not without their share of benefits so let’s take a look at some of the advantages of investing in gold funds:

1. Protection from Inflation

Gold has always been a valuable commodity since ancient times, due to its inherent characteristics like rarity, malleability, durability, etc. It has intrinsic value, which means it is valued independently of any other asset or currency.

As such, Gold Mutual Funds are a good hedge against inflation. However, you must note that gold doesn’t always act as a hedge against inflation in all countries or in all periods of time. As such, you must know when to invest in gold and when not to invest in gold mutual funds to get the maximum benefit from this asset class.

2. High Liquidity

Gold is a Liquid Asset. An asset is considered to have high liquidity if it can be easily converted into cash. Gold mutual funds happen to be a liquid asset, and you can easily sell them when required. You will get your cash immediately after selling gold. On the flip side in the case of physical gold, you will have to first find a  buyer and then sell at a price that suits all the stakeholders involved.

You can easily sell your physical gold but the issue is that no one will pay the exact market price for it. There is always some deduction for making charges etc., which means that if something urgent comes up, you may be forced to sell below market price.

3. Highly Affordable:

You can start investing in gold mutual funds almost immediately by spending very low amounts of money.  This makes it extremely easy for investors to enter this field as the barrier to entry is so less. Compared to actual physical gold this is a good scenario since you don’t need to come up with high amounts of cash just to invest. Hence with these funds, you won’t need to keep a track of today’s gold rate Kerala 1 gram. So that you can learn of the minimum investment you can afford. You can visit Khatabook to learn more.

4. No Storage Space Required:

If you purchase physical gold in the form of jewelry, bars, or coins, then you will need to find space to store the same in your house or bank locker. This is not the case with mutual funds as all your investments are in Demat form which can be easily stored in a Demat account that you can open with a broker or bank.

Unlike physical gold, you don’t have to worry about losing any part of your investment due to theft or misplacement.

5. Purity Concerns

Unlike the scenario where you buy physical gold, you need to worry about the purity of the gold you are buying in the case of gold mutual funds the purity won’t be a concern for you.

Back to top