All You Need to Know About Gold Funds

Invest in GOLD and give a boost to your investment portfolio

Written ByAashima MongiaContent Writer (Expertise: Term Life Insurance & Investment)

Reviewed ByAtul KathuriaBusiness Head – Term & Investment | Policybazaar.ae

Last updated on 15 January 2021Editorial Standards

Making investments in life is very important for every individual. Investments are carried out with the hope of growing or multiplying your savings over time. The major purpose of making investments is to protect yourself and your loved ones during phases of financial instability. In support of this, when it comes to multiple investment options, Gold is one such investment that offers higher returns. Whether you choose to invest in gold in its physical forms by purchasing gold ornaments, chains, plates, bars, etc. or invest in non-physical forms of gold, your investments never go waste. Gold is an asset which is very easy to liquidate and thus increases its value as a form of investment.

Buying gold funds is a method of investing in gold that provides good returns. Within the past, one-year, gold mutual funds have topped the return charts. Some gold mutual funds have offered returns up to 23.81% in one year depending on the gold rate in UAE. Practically it is near about impossible for any sort of mutual fund or gold fund to provide stable returns of 23% every year, mutual/gold funds are subject to market risks and witness phases of ups and downs. However, gold funds might not be able to provide a return rate of 23% next year also, but on average they are quite good return generating assets.

Gold Funds: How do They Work?

A gold fund is an open-ended fund where investment in units of gold exchange-traded funds (ETF) is done. The primary objective of gold funds is to grow your savings by tapping the potential of gold as a commodity. Gold funds are highly suitable for novice investors who desire to invest in gold. Instead of holding gold in its physical forms it is much more convenient and profitable to invest in gold funds.

Each of your gold funds has a fund manager who would guide you to take investment bets as per the objective of the fund. The returns associated with a gold fund are very closely related to the exchange-traded funds or ETFs and the current gold rate in UAE.

Benefits of Investing in Gold Funds

The first and the most considerable benefit associated with gold funds is that when an investor chooses to invest in gold mutual funds they get the benefit of exposure to gold in a much easier and convenient way. For investing in exchange-traded funds (ETFs), one needs to have a DEMAT account whereas gold funds have no requirement of DEMAT accounts. Different units of gold funds can be purchased or sold at the current gold rate in UAE anytime during business hours from any part of the country. Gold funds allow investors to reap the benefits of the value of gold without actually possessing gold. Investing in gold is the best way to hedge inflation and dropping rates of currency. Moreover, gold funds enhance the overall value of your financial portfolio making it much more stable. Gold funds can be used as collateral while borrowing money from financial institutions and banks. The price of each unit of the gold fund is backed by the gold rate in UAE, therefore the purity factor of gold remains intact.

The Bottom-line

In the article, we have covered why and how you should invest your savings in gold funds. While selecting funds you need to analyze various factors from different angles. There are various qualitative factors to be considered when you are deciding on purchasing gold funds.

Gold is considered to bring good luck and fortune and we hope by investing in gold funds you manage to multiply your savings; good luck and fortune arrive at your doorstep as well.

HAPPY INVESTING!

Last Updated At - 15 January 2021

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