Mutual Funds
5 Golden Rules of Mutual Fund Investing for First-Timers
Gold has long been considered a safe haven for Indian investors, especially during times of market uncertainty. But buying physical gold comes with its own set of challenges, such as high making charges, risk of theft, and storage issues. That’s where gold mutual funds step in.
Gold mutual funds allow you to invest in gold as a commodity without worrying about safety or additional costs. You can purchase gold units from the Gold Exchange Traded Fund, and add stability to your portfolio.
These funds offer convenience and come with relatively low risk. More importantly, they serve as a hedge against market volatility, helping to protect your investments from sharp fluctuations. Even if you're comfortable taking risks with mutual funds, allocating a portion to gold funds can add much-needed stability to your overall portfolio.
Apply for gold mutual funds online through the Moneyfy portal, and shield your money from stock market volatility. Remember, the long-term returns of gold funds can far exceed your returns expectations. Compare them on our website, and apply now!
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Gold mutual funds are types of mutual funds that invest in the equity stocks of gold-producing companies, physical gold, and Gold Exchange Trade Funds (ETFs). They are a convenient and flexible way of investing in gold without the need to purchase the commodity in its physical form.
Gold funds in India operate on a fund-on-fund structure, where the underlying asset of the mutual fund is physical gold. As a result, any change in the price of gold leads to a change in the value of gold fund investments.
Gold funds offer several advantages to its investors, such as:
Inflation hedge: Gold is often seen as a safe investment during inflationary periods, helping you preserve purchasing power.
Higher liquidity: Buying and selling physical gold can be tedious and often does not guarantee fair market value when selling gold during an emergency. In contrast, gold funds can be easily purchased in digital form and redeemed easily from the AMC, offering high liquidity.
Minimal storage cost: Physical gold involves hassles with storage and security. Gold mutual funds, on the other hand, can be stored digitally in a Demat account or your investment account, reducing storage costs.
Low cost of acquisition: Buying physical gold involves various additional fees in addition to the actual cost of gold. These can include making charges on jewellery, GST, custom duty, etc. These charges do not apply to Gold funds. The only extra cost you need to incur is the expense ratio of the fund. This brings down the investment cost as compared to physical gold.
Now that you know about the benefits of investing in gold, let’s talk about the more important subject, i.e., “How to invest in Gold?” Apart from the traditional method of buying jewelry, gold coins, bars, billions, or artifacts, you can now invest in gold online through several modern methods. For example, you can invest in gold Exchange-Traded Funds (Gold ETFs) or gold mutual funds. Investing in gold ETFs is equivalent to buying physical gold, albeit in the digital form.
Below are the different methods in which you can invest in gold in India:
Buying physical gold (jewelry, gold coin, gold bar, gold biscuit, etc.)
Investing in gold ETFs through a Demat account
Investing in gold mutual funds
Buying sovereign gold bonds
Comparison Between Different Gold Investment Methodologies
Physical Gold |
Gold ETFs |
Gold Mutual Funds |
Sovereign Gold Bonds |
Buy gold in the physical form. |
Buy ETFs that invest in gold bullion. |
Buy mutual funds that invest in gold bullion or gold mining companies. |
Buy sovereign gold bonds issued by the Reserve Bank of India. |
No Demat account is required. |
A Demat account is required. |
No Demat account is required. |
No Demat account is required. |
You have to pay only the price of the gold and the making charges (if any). |
You can invest via a stockbroker that can levy asset management charges and brokerage fees. |
A fund management charge is levied by the Asset Management Company. |
You’re required to pay the price of the bond and nothing else. |
Fluctuations in gold prices may affect the value of physical gold. |
Market fluctuations may impact your investments. |
Changes in gold prices do not affect the value of gold mutual funds. |
Safer investment avenue that provides assured returns. |
No paperwork is required. |
Paperwork is required. |
Paperwork is required. |
Minimum paperwork is required. |
No documents are required to purchase physical gold worth less than Rs. 2 lakhs
For purchasing gold worth Rs 2 lakhs or more, you may have to submit your PAN card to the seller
For investing in Gold ETFs, you will need to have a Demat account
For investing in gold mutual funds or sovereign gold bonds, you will need to submit your KYC documents, including your PAN card, Aadhaar card, Voter ID card, and/or Passport
Gold mutual funds offer a smart and hassle-free way to invest in gold. Here are some key advantages-
With these benefits, gold mutual funds provide a secure, flexible, and cost-effective way to invest in gold without the complexities of physical ownership.
Here are a few things that you must consider when investing in gold mutual funds-
Tata Moneyfy is here to guide you on your investment journey. Here's how you can invest in the best gold mutual funds through Tata Moneyfy:
Gold mutual funds invest in gold-related assets or stocks of gold mining companies. In contrast, gold ETFs invest in gold bullion and gold manufacturing companies by tracking and trading their units on the stock exchange. Mutual funds don't require a Demat account, but ETFs do for trading.
Gold mutual funds pool money from investors to invest in gold or gold-related securities, primarily Gold ETF. Their performance is tied to the price of gold, offering returns based on market fluctuations and the fund's portfolio management.
Gold mutual funds are subject to capital gains tax. Short-term gains (within three years) are taxed as per the investor's income slab, while long-term gains (after three years) are taxed at a rate of 20%.
Investors looking for portfolio diversification, a hedge against inflation, or long-term wealth preservation should consider gold funds. It's ideal for those who want exposure to gold without holding physical assets.
The top gold mutual funds in 2025 are those offering consistent long-term returns, low expense ratios, and strong fund management. Always compare performance, liquidity, and risk factors before making an investment.
It’s ideal to stay invested in gold funds for at least 3 to 5 years. A longer horizon helps absorb short-term market fluctuations and maximise potential returns over time.