Most investors are aware that saving is just not enough and one needs to invest correctly. Gold is not just a precious metal for Indians it is also a form of investment.
However, owning gold these days in physical form has its own demerits as there is risk of theft, moreover one cannot be sure of its purity.
As of 2021, investing in Gold funds in India is one of the latest means to invest in gold as an asset without possessing the metal in its physical form. Gold mutual funds are open-ended investments; the units offered depend on the units offered by the gold Exchange Traded Fund.
Is it worth investing in gold funds in India in 2021?
The fundamental reason for investing in gold funds in 2021 is to create wealth during the investment tenure and diversify the portfolio and minimising the market volatility risk.
Investors can buy/sell the gold ETF units according to their own convenience. Gold ETFs in India do not have any lock-in periods, thus offering liquidity to an investor’s mutual fund portfolio. Because gold funds in India can be owned and traded in digital format, this keeps them safe from theft and also provides security to the investor.
Taxability
In India, investments in gold mutual funds in India for more than 3 years are regarded as long-term. The LTCG on gold is taxed at a 20% rate while short-term capital gains (STCG) are taxed at the appropriate the slab rate applicable to the investor.
Who should invest?
In India, Gold funds are an excellent way to diversify one’s portfolios; thus helps to minimise the downside risk
As of 2021, with reference to gold funds in India, one should remember that gold is not just another investment. Gold funds in India can also be used as risk reducing portfolio diversifier against economic shocks because of its negative corelation with other asset class. Many individuals diversify their investment portfolio investing a part in gold funds to diversify portfolio investments from the fluctuating market. However, investing large sums even in the best gold funds in India to avoid fluctuations may not be a wise move. In fact, it could be counterproductive. Ultimately, one should invest according to one’s financial goals with the help of a good financial advisor.