Since ages, Indians have been known for their possessiveness for gold. In the past few years, no other investment avenue registered such a significant growth rate other than the gold. Recently, a number of assets including gold witnessed a fumble in the market. In the past few months, gold has witnessed a slump in its prices which had turned the whole market skeptical about investment in the so-called ‘save avenue’ of investment.
Consequently, several people found mutual funds as an appropriate alternative to gold. Mutual funds distribute the investments along with industries that eventually mitigate risks. In short, it works on the principle of not putting all the eggs exclusively in one basket. Although mutual funds require more involvement on the part of investors relatively on that of gold such as pre-investment research, planning, and vigilance.
In India, gold is considered not only as a precious metal but is also associated with several religious and supernatural significance. It also works in the market as good as paper money. On the other hand, a mutual fund is nothing but a financial product that works on the fundamental of investing the investor’s money in several money market instruments across the spectrum.
Many people prefer gold over mutual funds as gold is not just an investment asset but is also works very well as a functional commodity whereas, mutual funds are explicitly a form of investment. Moreover, you can easily make and manage the investment in gold by yourself with little knowledge in it, on the other hand, money market professionals manage investments in mutual funds.
When it comes to strategies that involve investments, you can buy physical gold or gold ETFs and both the things are similar and there’s no such diversification in that field. Mutual funds, on the other hand, involves a complex system where you can involve diversification of your investment portfolio through a variety of securities.
Mutual funds provide better securities as there is lesser physical risk involved with it, comparatively with gold which is open to theft and burglary. There are several parameters in which you can compare both the investment avenues hence, it would be difficult for us to declare any one of them as better than the other.