Who doesn’t want to grow their money? However, some just want to keep their savings safe while some decide to take the risk and invest their savings in order to get the maximum returns.

Well, the most preferred option opted by the majority of people is to keep their savings safe and earn some interest on it. For this many prefer to invest their hard-earned money in safe portfolios such as savings account, fixed deposits while few buy gold. However, these were the options which assure you that your money is safe. But the fact of the matter is your money can’t grow when used in this way. Though it is safe, it won’t give you great interest in the future.

Mutual funds are a great way to invest in bonds and equities. 

When you invest in mutual funds there is a fund manager that takes care of decision making to see which equities or government securities to invest in. Hence, mutual funds are the best way to keep your investment portfolio diversified which yields you great returns. However, mutual funds are subject to market risk and it’s suggested to read the documents carefully.

In this blog, we will be discussing gold and mutual fund investment and concluding which is the best option.

Investment in Gold

When it comes to gold the yellow metal has always been viewed as a passive investment in Indian society. People think that the value of gold would appreciate in the future and hold on to it, but earn poor returns. Gold has lost its potential to create wealth and is not performing up to the expectations.

The yellow metal has always been viewed as a passive investment. It is assumed that the value of gold would increase in the future and thus most of the people hold on to it. The idea is quite wise but yields poor returns. Well there are both pros and cons related to it, let’s discuss them all:

Inviting in Gold 

Returns 

Investment in gold is quite safe though it does not pay any dividends. However, the best you can do while investing in gold is to track the gold price regularly and sell it at the highest price. The returns you get are surely not low from what you get when investing in mutual funds or equities. 

Risk Involved

Investment in gold is not much risky but in terms of making maximum profit and minimizing the risk, try to buy gold when you think the price is lowest and when required sell it when the price goes higher.

Apart from this theft, and loss is the other risks related to gold. Hence, whenever you invest in gold it is suggested to keep it in bank lockers so that it can be safe.

Market fluctuations

Gold cannot resist market fluctuations and tend to go up in the long run.

Liquidity

Gold investment has one of the highest degrees of liquidity. As you are free to sell or trade gold anywhere and anytime when you have the papers. 

Investment in Mutual Funds

Mutual funds are pooled investment vehicles. Mutual funds are the best way to keep your investment portfolio diversified. One of the advantages of investing in mutual funds is that it mitigates the risks and at the same time it provides maximum profit as compared to other investment portfolios.

Professional Assistance

When you invest in mutual funds your investments are managed by a professional called a fund manager. Hence, through their expertise and knowledge, they pick the best stocks and bonds for your portfolio.

Low initial investment

Mutual funds require low initial investment funds. When investing in gold you need thousands as the price of 10 gram 24-carat gold normally ranges from ₹43,000 to ₹44,000. Whereas with mutual funds initial investment can be started with ₹ 500.

Liquidity

Mutual fund investments also provide liquidity as you can ask for redemption. However, it may take 24 to 48 hours to transfer the money back into your bank account.

Tax efficiency

Investment up to ₹ 1.5 lakh in mutual funds can be claimed tax deduction under the income tax act 80C. There are other investments too which are allowed under this. Capital gain from mutual funds comes under (SCGT) and is taxable as per the income tax rules.

Market risk

Mutual funds are subject to market risk because they are linked to asset classes like equities and bonds. This is because equity funds are riskier and are more volatile than the debt funds. 

In the last 10 years, the gold price has not increased much and has average inflation close to 7.5 %. Hence, investing in gold can be quite safe but at the same time, it can’t give you good returns. Whereas when you invest in mutual funds you get low risk involved and good returns as well.