Wealth Tips

Gold vs. Mutual Funds: Which is the Better Investment Option?

August 25, 2020

Talk to a Wealth Coach for free!

Yay, we've got your details. A Cube Wealth Coach will be in touch soon!
Please provide a proper answer.

Schedule a call based on your convenience. And get an expert to help you invest.

Gold has always been a hot favourite for Indian Investors. So, if you're in a "should I invest in gold versus mutual funds?" frame of mind, you're not the first. Many new investors have wondered if gold is a safer investment when compared to mutual funds. Mostly because gold seems like a safe investment it is a real asset since man-made money and many currencies are backed by the country's gold reserves. On the other hand, we all know that mutual fund investments are subject to market risks (though we have never read the red herring prospectus carefully).


That is why in this piece we'll try to settle the gold versus mutual fund debate for you. We'll also look at how gold as an asset compares to most mutual funds. So, lets mutually dig the gold out by separating facts from fiction. To be fair, we'll list down benefits of both asset classes and then delve into their cons.


  • Benefits of Investing in Gold


Gold may not give exponentially high results but it's value rarely degrades. Which is why it's considered a safe investment by most investors. It is also a physical asset that you can turn into gold jewellery, gold coins, gold biscuits etc. You can test its purity and its value is globally accepted. Gold is, therefore, a really good store of value. It is also an asset that offers easy liquidity in case of emergencies.


Benefits of Investing in Mutual Funds 


Mutual funds spread your investments across several market assets thereby reducing the risk involved. They offer you the flexibility of investing in equity, debt across industries and countries. Mutual Funds are managed by financial experts whose sole motivation is to get higher returns for their investors. Mutual funds as a whole have always beaten inflation. If you invest wisely you can get extremely high returns.


Learn about Cube Wealth's brilliant U.S Equities


Drawbacks of Investing in Gold


Like all assets, gold has its own drawbacks. It raises logistics, security and storage concerns. You alone are responsible for managing and securing your gold - which is a pain for most investors. You also have to live with the fear of theft and robbery unless you invest in a Gold ETF. Besides this when sold in the form of jewellery gold involves making charges over and above it's the actual value. However, while selling gold jewellery you will invariably lose some value as it is very delicate.


Drawbacks of Investing in Mutual Funds


Like Gold, Mutual Funds also have their own drawbacks. Let's start with the obvious fact that Mutual Funds are not physical assets that have inherent value. Moreover, Mutual Funds don't always offer high liquidity. The risk involved can be higher if you choose the wrong allocation in your asset portfolio. This is why is it important to always consult a wealth management expert. 


CLAIM A FREE CONSULTATION!

EMAIL A CUBE WEALTH COACH FOR FREE


Gold vs Mutual Funds


Now that we know the basics lets do a face to face comparison of the two assets. Mutual funds are a clear winner if you're looking to build wealth. Especially when you take into account the ease offered by systematic investment plans. You can invest as little as Rs.500 and increase or decrease the amount basis of your financial comfort. Gold, on the other hand, is a great store or value so keeping a small part of your savings as gold isn't a bad idea. However, when wealth creation bis the goal, then gold falls flat on its face compared to mutual funds. Mutual Funds simply offer a wide variety of variations, permutations and combinations to suit your financial needs. At the end of the day, you're much more likely to become rich thanks to your mutual fund investments than you are due to your gold investments.

GOLD MUTUAL FUNDS
Low Returns Medium to High Returns
High Liquidity Low Liquidity
Fear Of Theft No Fear Of Theft
Storage Issues No Storage Issues
Can Be Used As A Commodity Cannot Be Used As A Commodity
Delicate & Easy To Lose No Such Issues
Low-Risk Investment Varies from low to high depending on the mutual fund
Good Store Of Value Good For Wealth Creation
Good To Supplement Other Investments Good irrespective of other investments


Should you invest in Gold or Mutual Funds?


If you're considering gold as an investment along with side mutual funds, stocks, bonds etcetera, then it makes sense. Otherwise, you're better off investing is something else. Even a fixed deposit is a better investment in the short term as you know exactly how much wealth you will gain from interest.


How to Invest in Mutual Funds?


If you want to invest in mutual funds you should consult a Cube Wealth Coach before you put your hard-earned money at risk. A Cube Wealth Expert will be able to help you understand your goals and the path to investment success.


FAQs

Q. What are gold mutual investment funds?

There are certain funds that invest in gold or related sectors. These can be used to indirectly invest in gold.


Q. Who invests in Gold?

Many people invest in gold as a tertiary investment Avenue. Besides this, new investors who do not understand the financial markets tend to lean towards gold as an investment.


Q. Is Gold a good long-term investment option?

Gold is a good store of value however as an investment it does not offer very high returns.


Q. Are mutual funds a good long-term investment option?

Yes, long term investment in mutual funds is a great way of growing wealth.


Rishabh P Nair
Rishabh P Nair is the Head Of Brand Content at Cube Wealth. Rishabh has been weaving stories for over 10 years and prides himself on building brands with a strong identity. Besides building content for multiple start-ups, he has written scripts for YouTube videos, digital ads, short films, TV Shows and films.

Talk to a Wealth Coach to get started.

Yay, we've got your details. A Cube Wealth Coach will be in touch soon!
Oops! Something went wrong while submitting the form.

Schedule a call based on your convenience. And get an expert to help you invest.

Grow your money without wasting time

on stock picking, poring over excel sheets, financial news, analyzing market trends, tracking the Sensex, researching company fundamentals, comparing mutual funds, reading financial reports, trying to predict the future & losing your sanity!