How to Choose Between Gold and Mutual Funds for Investment

Gold and mutual funds are two popular investment options, but choosing between them can be challenging. In this guide, we will help you make an informed decision by comparing the benefits and drawbacks of both assets.

Also read: Should You Buy Gold Or Invest In Mutual Funds?

Benefits of Investing in Gold

  1. Stability: Gold is known for its stability; its value rarely decreases over time.
  2. Physical Asset: You can hold gold in various forms, such as jewelry, coins, or bars, making it a tangible asset.
  3. Global Acceptance: Gold has universal value and is recognized and accepted worldwide.
  4. Liquidity: Gold offers liquidity, allowing you to sell it quickly in emergencies.

Benefits of Investing in Mutual Funds

  1. Diversification: Mutual funds spread your investments across different assets, reducing risk.
  2. Flexibility: Mutual funds enable you to invest in a variety of sectors and countries.
  3. Professional Management: They are managed by financial experts focused on maximizing returns.
  4. Inflation-Beating Returns: Historically, mutual funds have outperformed inflation.

Drawbacks of Investing in Gold

  1. Logistics and Security: Storing physical gold can be a logistical and security challenge.
  2. Value Loss: Gold jewelry, in particular, may involve making charges and can lose value when sold.

Drawbacks of Investing in Mutual Funds

  1. Not Physical: Mutual funds are not tangible assets and lack inherent value.
  2. Liquidity: They may not always offer high liquidity, depending on your investment choices.
  3. Risk: Poor asset allocation can increase the risk of investing in mutual funds.

Gold vs. Mutual Funds

When comparing the two, mutual funds are generally better for wealth creation, especially with systematic investment plans (SIPs). While holding some gold as a store of value is wise, mutual funds offer more wealth-building potential. They provide various investment options tailored to your financial needs, making them a preferable choice for long-term wealth creation.


If you’re considering gold as part of a diversified investment portfolio, it can be a reasonable choice. However, for substantial wealth creation, mutual funds are the preferred option. Always consult with a financial expert to make informed investment decisions.

Also read: How to Invest in Apple, Amazon, and Google Stocks from India: A Step-by-Step Guide

Frequently Asked Questions:

  1. What are gold mutual investment funds?
    These funds indirectly invest in gold or related sectors.
  2. Who invests in Gold?
    Many investors use gold as a tertiary investment or opt for it due to limited knowledge of financial markets.
  3. Is Gold a good long-term investment option?
    While gold is a stable store of value, it may not offer significant long-term returns as an investment.
  4. Are mutual funds a good long-term investment option?
    Yes, investing in mutual funds over the long term is an effective strategy for wealth growth. Explore various mutual funds on the Cube Wealth App.
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