Why invest in a Gold Mutual Fund when you can invest in a Gold ETF?

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In one of our previous articles, we had mentioned how to invest in digital gold in the form of Mutual Fund and Gold ETFs. They are a much better option as compared to physical gold and require less effort. Today in this article, we will talk about 2 such options, Gold Mutual Fund and Gold ETFs. And help you understand which would be better for you.

Gold Mutual Funds-
Gold funds are also a type of mutual fund, but they invest in gold-related investments. Some of these are Stock of gold production and distributing syndicates, physical gold, or gold mining companies.

Gold ETFs-
GOLD Exchange Traded Fund or Gold ETF is a digital form of physical gold, each unit of a Gold ETF represents 1 gram of gold and is backed by physical gold, which is 99.99% pure gold. Gold ETF is listed and is traded on the stock market like stocks, and whenever you sell them, you receive an amount equal to the gold price at that time. This is a great way of investing in gold without buying physical gold ETFs.

Which is a better option- Gold ETF or Gold Mutual Fund?
If you are looking for a better option for both of them, then I would suggest you go with Gold ETF, here are some of the points which would help you understand which choice would be better for you- Mutual fund or Gold ETF.

1. Gold Exchange-traded funds (ETFs) invest in gold, which has a purity of 99.50, while the investments of Gold mutual funds are diversified- they invest in Stock of gold production and distributing syndicates, physical gold, gold ETF, or gold mining companies.

2. The minimum investment to start with a Gold Mutual Fund is Rs.1000, however, if you want to invest in Gold ETFs the minimum investment amount is equal to that of 1 gram of gold current price. So, if you don’t have at least 4000-5000 then it would be tough for you to invest in a gold ETF.

3. Gold ETFs are cheaper and more affordable for investors, as there are no exit loads applicable. But if you invest in Gold Mutual Funds, then you would have to pay an exit load if you redeem your units before one year is completed.

4. Gold ETFs similar to stocks are traded on the stock exchange and one can buy or sell them at any point of the day on the exchange also it is a very effortless process. But if you invest in Gold Mutual Funds, you can only redeem them at the end of the day, and you would have to apply to a fund house if you wish to buy more units.

5. You don’t have a SIP option under Gold ETFs, but you have that option in a Gold mutual fund.

In Closing – Gold ETFs are a great option if you have the adequate amount to invest, but if you invest in a gold mutual fund then you have an option to start low, and also you have an option to start SIP. But gold ETFs are better and more transparent as their prices are the same as current gold prices, also they are easy to trade in. So overall Gold ETF is a better option than Gold Mutual funds.

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