With skyrocketing prices and inflation, it is prudent to generate an extra source of income to combat the crisis. However, the unlimited options of investments available in the market make it a tough job to choose one.
Mutual Fund is a professionally managed investment scheme run by an asset management company that brings together a group of people and invests their money in stocks, bonds, securities depending on their requirements. Mutual Funds are registered with SEBI.
Being associated with numerous benefits, Mutual Funds have gained traction in India. Investing in Mutual Funds facilitates diversification. This ensures that if there is a loss of one investment it can be compensated by the gain in another. The major perk is that the funds are managed by experienced professionals and they offer the much-needed liquidity, allowing an investor to redeem the value of the units at any point of time.
Key highlights of Mutual Funds Vs Gold.
Mutual Funds are able to beat inflation with their outperformance. Choosing a good portfolio of investment is all that is required. (And savart can help you with it). GOLD fails to beat inflation over the long term.
Mutual Funds have tax benefits if you remain invested in the portfolio over a year. Gold has the tax benefit for 3 years, but most gold non-ornamental gold investments are liquidated much before that.
In all but few cases, gold & mutual funds have the same level of liquidity.
Mutual Funds charge an expense fee for managing our investment, but the investor has the liberty to not pay for that and invest into an ETF with almost zero fees too. Gold may have inconsistent, hidden charges in its maintenance in physical form such as during making, storing and liquidating.
Mutual Funds are most preferred as they yield better returns as compared to Gold where the rate is fluctuating and returns are not very high.
No risks are involved in Mutual Fund investment as the process takes place online, whereas chances of Gold getting stolen or impure gold persists in the case of physical purchase. Gold is now available for purchase online too, through funds and bonds. So, the ease of purchase is same in both cases.
Fluctuating prices has turned the whole market skeptical about the sanctity of this ever shining ‘investment’ and some even comparing it to Bitcoin. Mutual Funds may also be equally or sometimes rockier in terms of volatility. It is important to stay patient and invested. If volatility is something one is not ready to fathom, other options make sense.
Mutual Funds mitigate risks by distributing the investment along with a wide spectrum of industries. It works on the wisdom of not putting all eggs in one basket. One can easily opt to have their capital gains and dividends reinvested. These reinvested gains accumulate eventually adding value to the investor’s total investment corpus. The reinvestment is generally processed without a sales load or any extra fees.
Gold has an exponential ornamental value over mutual funds and given that Indians have an affinity towards physical assets, gold is highly favored in the markets. However, this is more often a case of financial illiteracy or ignorance rather than simply assuming that Indians love to sport their gold. At the end of the day, most people would give up ’showing off’ to something that makes them much richer.
savart is ready to help all those who are ready to make that trade-off.