Gold Mutual Funds are a safe, easy, and modern way to invest in gold today. They allow you to invest without a Demat account. Learn about the many benefits of investing in Gold Mutual Funds.

In India, gold is not just a metal, but a symbol of trust, tradition, and future security. It has always been a favorite investment option for people. However, in today's digital age, the way gold is invested has also changed. Now, there's no need to go to a jewelry shop or store gold in a locker. Gold Mutual Funds are a smart alternative to this change.

If you want to invest in gold but want to avoid the hassle of buying physical gold, these funds can be a great option for you.

What are Gold Mutual Funds?

Gold Mutual Funds are a type of Fund of Funds. This means that these funds do not invest directly in physical gold, but instead invest in Gold ETFs. Gold ETFs are schemes that invest in physical gold and are traded on the stock exchange.

When you invest in a Gold Mutual Fund, your fund manager purchases a Gold ETF with that amount. Therefore, your returns are based on the fluctuations in gold prices.

Benefits of Investing in Gold Mutual Funds

SIP Option - Big Investment with a Small Amount

The biggest advantage of Gold Mutual Funds is that you can start an SIP with just ₹500. This means you don't need a large lump sum.

No Demat Account Required

Unlike Gold ETFs, investing in Gold Mutual Funds does not require a Demat account. You can invest directly through an app, website, or AMC.

No Worries About Purity

Physical gold has issues with adulteration or purity, whereas Gold Mutual Funds offer the assurance of 99.5% pure digital gold.

Buying and selling is extremely easy.

You can buy or sell these funds at any time. The money is directly credited to your bank account within a few days.

No Making Charges

Buying physical gold incurs a making charge of 5-15%. Gold Mutual Funds don't have such costs.

Things to keep in mind before investing

Expense Ratio

Fund houses charge an expense ratio for fund management. This typically ranges from 0.5% to 1%.

Tracking Error

Sometimes, there's a slight discrepancy between the price of a Gold ETF and the fund's return, which is called a tracking error.

Tax Rules

Selling before 24 months: Tax is applicable according to your income slab.

Selling after 24 months: LTCG tax of 12.5% + cess is applicable.

How to invest in Gold Mutual Funds?

Step 1: Complete KYC (online with PAN, Aadhaar)

Step 2: Choose a trusted AMC like SBI, HDFC, or ICICI.

Step 3: Select a Gold Fund and check its Expense Ratio.

Step 4: Decide whether to invest through SIP or Lump-Sum.

Step 5: Complete the investment through an app or website.

FAQs

Q1. Are Gold Mutual Funds safe?

Yes, they are SEBI-regulated and therefore considered safe.

Q2. Is a Demat Account required?

No, it is required for Gold ETFs, but not for Gold Mutual Funds.

Q3. What is the minimum investment in a Gold Mutual Fund?

In most funds, one can start with a SIP of ₹500.

Q4. Is there a risk involved?

Yes, because gold prices fluctuate, there is a risk.