Gold Mutual Fund vs Digital Gold
Gold Mutual Fund vs Digital Gold, which is better, and which one should an investor choose? This blog will talk about the pros and cons of investing in these asset classes.
Gold has been the conventional investment choice of Indian households over the years, but gradually individuals have realized that keeping physical gold has certain downsides, like storage costs, and more importantly, safekeeping, as it has a risk of theft and robbery.
Investors have turned to Digital Gold and Gold Mutual Funds as both are modern-day preferred investment tools because of their value.
The benefit of investing in both Gold Mutual Funds and Digital Gold is that investors will not need a Demat account for trading, nor will they have to worry about purity or making charges.
What is a Gold Mutual Fund?
Gold Mutual Fund, also referred to as Gold Fund, is described as an open-ended Mutual Fund that invests through units of Gold ETFs. Every Gold Fund has a fund manager who is responsible for buying and selling desired assets based on the investment objective of the fund.
In a Gold Mutual Fund, the fund manager invests not in physical gold but in paper gold of 99.5% purity for generating an income.
What is Digital Gold?
In the digital era, more and more investors are turning towards Digital Gold. It is a financial investment option where investors can trade gold units online anywhere and anytime.
Buying Digital Gold is like holding the 24k gold in a virtual safe instead of a physical vault or locker. Moreover, there are no safekeeping or purity issues; hence investors often consider it a safe bet in terms of investment.
An overview of Gold Mutual Fund vs Digital Gold
Gold Mutual Funds can invest in gold only through Gold ETFs. The fund manager cannot make direct investments in the stocks of gold packaging, processing, refining, and mining companies.
As per SEBI Regulations, these investments fall under the thematic category and cannot be considered Mutual Funds.
Invest in Gold Mutual Funds on the Edufund App with help from qualified advisors.
Digital Gold can be purchased online by anyone, at any place, and at any time. Investors do not need a fund manager for such investments as it can be done through mobile wallet apps like PhonePe, Google Pay and Paytm, etc.
Invest in Digital Gold through Edufund DigiGold Interface, which is easy to operate, understand and manage. Investors can see the invested amount, quantity of gold holdings, % returns, and the current value of their investment on a single screen.
The performance of the Gold Mutual Funds depends on the ongoing fluctuations in the price of physical gold.
The Digital Gold price is similar to that of the current rate of physical gold in the market, hence the price that you see is for both physical and Digital Gold.
It is possible to invest just INR 100 in a Gold Mutual Fund. Investors can also trade online 1 gm of Digital Gold at the prevailing market price.
Both Digital Gold and Gold Mutual Funds are considered highly liquid investments, although Digital Gold can be sold more easily online in a minute without any hassles, while the investor will have to submit the redemption form to the fund house. Investors will then receive an equivalent value in their account.
With the help of the Edufund App, the process of selling Gold Mutual Funds and Digital Gold is hassle-free, and the money is transferred to the account within 48 hours.
Gold Mutual Funds offer less convenience than Digital Gold as they have to be handled through proper channels by a fund manager, whereas Digital Gold can be handled by any individual.
6. Regulatory Body
Gold Mutual Funds are regulated by SEBI, and fund houses will have to follow the strict SEBI rules, while Digital Gold has no authorized regulatory body as it is run by independent trustees.
Smart investors understand that gold is a sure bet against equity investments and inflation, and hence it is better to invest in gold when it comes to diversification of assets.
What has changed the mindset over the years is the preference for Gold Mutual Funds and Digital Gold instead of physical gold.
Investing in Gold Mutual Funds vs Digital Gold actually depends upon individual preferences. Hope the above-mentioned blog gives better clarity on both asset classes.
Consult an expert advisor to get the right plan