A gold mutual fund is an alternate way to invest in the yellow metal. It is a safe investment and might be able to ensure convenient returns. You can invest in stocks of companies that work with fabrication, mining, processing, and gold distribution. One can also pick gold ETFs (exchange-traded funds) run by AMCs. The performance is largely dependent on the movement of stock prices of these firms. The returns are estimated accordingly.
Investors can still wonder if it would be a worthy investment. So, if you are in a dilemma, read on to know why gold funds are a great choice in 2021 and beyond.
Hedge Against Economic Shock
Gold funds can act as a cushion against economic shock and stock market collapse. The yellow metal performed well in the 2020 pandemic year, as investors flocked to the safe-haven asset. Gold is also considered a good hedge against inflation. Inflation expectations have been rising, due to lower interest rates globally. This is likely to continue for a couple of years, till the US Federal Reserve raises its rates. So, investing in this instrument is a good idea amid a global crisis.
Redemptions can be done at any point. There are no charges and penalties involved. This makes gold fund a beneficial investment. Medical emergencies can arise anytime in a pandemic era and a ready cash reserve can make hospitalization easy. The fund can also be used to boost business needs or cater to educational expenses. The fund is usually disbursed within as little as 3 days for quick usage. Check the NAV of mutual funds which track gold prices regularly.
No Storage Hassle
A gold fund is an electronic investment that needs no storage. Otherwise, maintaining and keeping physical gold is quite a task. Bank lockers usually have high charges which can increase the overall expenses of the investment. In fact, you might also worry about safety-related issues. Therefore, gold funds are extremely convenient for investors.
Inculcates Financial Discipline
A structured investment is crucial to achieving financial success. Parking money in gold funds through SIP (Systematic Investment Plan) is a good way to maintain savings discipline. This is all the more necessary for young investors who are just starting to save money. A fixed amount is pooled towards the gold fund every month without you having to monitor the process. Simple and quick investment is possible through DEMAT accounts, online platforms, and AMCs.
When the stocks go down, gold prices usually rise. So, it could be a great instrument to reduce market risks and balance your portfolio. When other securities like debts or equities are sliding, a gold fund can be your saviour. This is much required to save you from financial losses amid a pandemic situation and otherwise.
In all, gold funds are worth your time and money. Ensure regular investment and review the NAV of mutual funds consistently. This is an efficient way to increase the chances of good returns in the long run.