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Top 5 Reasons Why You Should Invest in Gold Mutual Funds

Gold mutual funds are investments in gold via Gold Exchange Traded Funds (Gold ETFs) or Gold Funds of Funds (Gold FoFs). Gold ETFs are passive investment vehicles that invest in physical gold and depend on gold prices. Investing in Gold FoFs, on the other hand, gives an indirect exposure to actual gold assets digitally. As a result, investors can receive the same benefits as when invested in real gold.

Here are five reasons why you should invest in gold mutual funds:

1. No storage issues

When it comes to the safety of real gold, investing in it becomes a problem. You have to keep the gold bars, coins, or jewelry in a secure location, such as a bank locker or a house safe. If you keep it in a bank locker, you also pay storage fees. Physical gold may also lose its luster over time owing to storage difficulties, resulting in a decrease in value. Because mutual funds are electronic investments, these issues do not arise with gold mutual funds. However, investors will face the scheme’s recurrent expenditures in addition to the expenses of the underlying system in which the gold mutual fund invests.

2. Allows investors to start small

Amounts as low as Rs. 500 can be invested in gold mutual funds as a single amount or through a SIP. Investing in gold mutual funds is thus easily accessible to everyone compared to real gold investments. It also disproves the assumption that buying or investing in gold requires a large quantity of money.

3. Portfolio diversification

A varied portfolio is more likely to survive an economic crisis than a basic one. Investors are prone to obtain consistent growth if they invest in several types of assets that perform well in different financial situations. 

4. Comparatively less unstable


When there is an economic downturn, the market swings, and stocks are among the first to suffer. Investing in gold mutual funds and SIP may be a smart option at such times. Gold mutual funds might be practical protection against stock market volatility. Historically, when stock prices have fallen, gold prices have risen. As a result, investing in gold through mutual funds and SIP is expected to mitigate any unpredictability in stock investments.

5. Liquidity benefits


Gold is a popular investment option since it is a highly liquid commodity, and gold mutual funds are no exception. When compared to any other asset, gold is the quickest and easiest to liquidate in India. If you need cash quickly, highly liquid investments such as gold mutual funds can be readily converted to money once redeemed may be in your best interests. The advantage of liquidating mutual funds versus real gold is that you may choose how much you wish to convert to cash.


Gold mutual funds are a popular approach to diversify a portfolio by acting as a hedge during unpredictable market behavior. In terms of storage benefits and simplicity of usage, gold mutual funds can be regarded as preferable to actual gold. So, download Tata Capital Moneyfy app and start investing online today.