Mutual Funds Vs Gold: which is better for Investment
Nov 15, 2019, 12:40 IST
Gold has always been the safest option for investors. Over the last few years, gold has always reported a significant growth rate in prices. However, during the recent periods, gold has witnessed a fumble in prices. The pace in which gold prices has stumbled down during the recent times show us that we need to take a careful decision while choosing to invest in gold.
The bottom line
Due to the trends noticed in gold prices, mutual funds has once again come up in the chart as a preferred form of investment. One of the advantages of investing in mutual funds is that they mitigate risks by distributing the investment across a wide spectrum of industries. At the same time, unlike investing in gold, investing in mutual funds requires a great deal of planning and vigilance on the part of the investor. Here we discuss the various pros and cons of investing in gold and mutual funds to learn how to make the right decision.
Risks involved
Transporting and storing gold carries the risks of theft and burglary. However, this can be mitigated while investing in gold ETFs. Mutual funds do not present such risks. Mutual funds can be bought and sold safely online.
Trading
For buying and selling gold, you do not pay any charges. There is no documentation involved and there are no intermediaries required. The process of buying and selling mutual funds involves intermediaries, entry and exit charges and documentation.
Gold investment cannot encash the highs that happen in the market. It does not earn anything to the investor periodically and it does not pay any dividends. Mutual funds ride both the bull and bear to fetch substantial returns to the investor.
Variations
There are no variants in gold accepting the quality standards like 24K gold and 22K gold. 24K gold is always expensive than 22K gold. Mutual funds have a lot of variants based on the kind of funds you choose. Hence it is very much essential that you choose the right option that will suit your investment hunger.
Gold investment is characterized by a high degree of liquidity. You can trade gold anywhere and anytime. Mutual funds also carry a considerable degree of liquidity as you can encash your mutual fund at the present Net Asset Value. However, you can sell them only in particular segments of the market. It is not possible to sell mutual funds to anyone and anywhere.
Market knowledge
You need not be vigilant or knowledgeable about the market when you invest in gold. Even a layman can invest in gold and get substantial returns if the investment is done over the long term. Mutual fund investment will demand that you remain on your toes all the time. If you want to make profits through mutual funds, you must be smart to respond to the trends in the money market.
Stability
Conclusion
Neither gold nor mutual funds is a clear winner. The decision to choose either gold or mutual funds must take into account the factors discussed above so that your investment serves its intended purpose.
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The bottom line
Due to the trends noticed in gold prices, mutual funds has once again come up in the chart as a preferred form of investment. One of the advantages of investing in mutual funds is that they mitigate risks by distributing the investment across a wide spectrum of industries. At the same time, unlike investing in gold, investing in mutual funds requires a great deal of planning and vigilance on the part of the investor. Here we discuss the various pros and cons of investing in gold and mutual funds to learn how to make the right decision.
Risks involved
Transporting and storing gold carries the risks of theft and burglary. However, this can be mitigated while investing in gold ETFs. Mutual funds do not present such risks. Mutual funds can be bought and sold safely online.
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For buying and selling gold, you do not pay any charges. There is no documentation involved and there are no intermediaries required. The process of buying and selling mutual funds involves intermediaries, entry and exit charges and documentation.
Gold investment cannot encash the highs that happen in the market. It does not earn anything to the investor periodically and it does not pay any dividends. Mutual funds ride both the bull and bear to fetch substantial returns to the investor.
Variations
There are no variants in gold accepting the quality standards like 24K gold and 22K gold. 24K gold is always expensive than 22K gold. Mutual funds have a lot of variants based on the kind of funds you choose. Hence it is very much essential that you choose the right option that will suit your investment hunger.
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LiquidityGold investment is characterized by a high degree of liquidity. You can trade gold anywhere and anytime. Mutual funds also carry a considerable degree of liquidity as you can encash your mutual fund at the present Net Asset Value. However, you can sell them only in particular segments of the market. It is not possible to sell mutual funds to anyone and anywhere.
Market knowledge
You need not be vigilant or knowledgeable about the market when you invest in gold. Even a layman can invest in gold and get substantial returns if the investment is done over the long term. Mutual fund investment will demand that you remain on your toes all the time. If you want to make profits through mutual funds, you must be smart to respond to the trends in the money market.
Stability
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Gold cannot resist the fluctuations in the market. Irrespective of the temporary fluctuations, the value of gold tends to go up in the long run. Mutual fund is a dynamic product that always rides on the highs and lows of the market and hence it can never be viewed as a stable avenue for investing. Conclusion
Neither gold nor mutual funds is a clear winner. The decision to choose either gold or mutual funds must take into account the factors discussed above so that your investment serves its intended purpose.