gold mutual funds: Which form of gold investing would be ideal this festive season?

The festival of lights and prosperity is upon us. As an auspicious time for many Indians, Diwali and Dhanteras are important days to make investment and gold purchase decisions.

The festivities and fervor call for keeping up with age-old traditions of buying gold.

Women in India have a strong emotional and secure relationship with gold. Over the years, they have been buying gold in the form of physical gold.

It is one of the preferred investment options for them across metros and small towns. According to LXME Women and Money Power Report 2022, 49% women were investing in gold and the metal held its position across all age groups.

While many still subscribe to the age-old traditions of purchasing physical gold, there are many alternatives available today to carry on our traditions and culture. Women often tend to believe that gold jewelry is an investment.

However, we neglect the liabilities that gold jewelry, or physical gold, for that matter, brings. The advantages of non-physical forms of gold can be observed by looking into the huge markup that gold jewelry or physical gold comes with.

Upon buying gold first there is a 3% GST to be paid. Additionally, the making and design charges erode the value of gold and since gold is in its physical form, it needs to be stored and protected from damage and theft, and a small price is also paid for storage and insurance.

In today’s time, more and more women are emerging as smart investors, realising the benefits that can be enjoyed by investing in gold electronically.

This Diwali, celebrate by investing in gold smartly through investment options like Gold Mutual Funds. It’s hassle-free, fairly valued, and a pure form of investment.

Gold Mutual Funds are mutual funds that directly or indirectly invest in gold. It is a convenient way to invest in an asset without having to purchase the commodity in its physical form.

Investors should consider their investments from an asset allocation viewpoint in addition to the auspicious element.

Gold Mutual Funds are suitable for investors who want to make small investments in gold or are looking for a liquid way of investing in gold. You get the benefit of professional fund management.

You can also make regular investments in Gold Mutual Funds by starting a SIP. This will make you a disciplined investor. When it comes to allocating money, disciplined decision-making is essential.

Gold is a great diversifier, and it should cover up to 5-10% of your portfolio. There’s no need to time the market if you’re investing with a long-term perspective. Percentage allocation in gold or choice of gold instrument is at the investor’s discretion, a basis of their investor profile.

Gold is a safety net that you must incorporate into your portfolio. So, invest in gold the smart way. This Diwali, take the first step!

(The writer is the Founder & MD of LXME – India’s First NeoBank for Women in the making)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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