Mutual Fund vs Gold Investment: Which option is better for you?

Every investor wishes to be safe and also give good returns. In the last few years, both gold and mutual funds have given good profits to investors. In such a situation, the question is natural whether gold is chosen for investment or mutual funds? Both options are beneficial in their own way. Let’s know in which investment will be better for you.

Gold is the name of safe investment

Gold is traditionally considered a symbol of safe investment. When the stock market has volatility or inflation increases, people turn to gold. Gold prices often increase over time, which can provide good returns to investors. According to experts, gold protects against economic uncertainty and inflation.
Nowadays, through Gold ETF, you can easily invest in gold in digital form. During the recent global stresses and trade war, the price of gold crossed Rs 1 lakh.
However, there is also a disadvantage of investment in gold – it neither pays interest nor dividend. Benefits only occur when you sell it at an increased price. Also, in the long term gold returns are lower than the equity mutual funds.

Mutual Fund: Opportunity for fast return

Mutual funds, especially equity funds, are connected to the stock market. When the market performs well, mutual funds have the ability to give more returns than gold.
In the long term, equity mutual funds have given strong returns beating inflation. The simplest way to invest in these funds is SIP (Systematic Investment Plan), which helps in taking advantage of cost averaging and market volatility.

Tax rules on gold and mutual funds

• Sleep: If you keep gold less than 36 months and sell, the profits levy short-term capital gains tax, which is according to your personal tax slab. By keeping more than 36 months, there is a benefit of 20% tax and indexation on long-term capital gains.

• Mutual fund: New rules have come into force from 23 July 2024. If you keep the equity fund for more than 12 months, the profit will be taxed at 12.5% ​​under the long-term capital gains (LTGC), provided the profit is more than Rs 1.25 lakh. Short-term gains will levy 20% tax.

What’s better now?

At present, gold is doing well due to global anxiety and inflation. But experts believe that as soon as the market is stable and interest rates will decrease, equity mutual funds will start giving better returns than gold.
Long -term goals – such as retirement, children’s education etc. – SIP in mutual funds is considered more beneficial.

How to decide?

• If you want to avoid risk and bring stability to the portfolio, investment in gold can be a good option.

• If you want more returns over the long term and can face market fluctuations, then investment in mutual funds will be better.

Choosing your investment depends on your risk -taking ability and financial goals. Take a decision carefully.

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