Gold Mutual Funds: Small installments, big returns - this is the smart way to invest in gold..

In India, gold is not just considered a precious metal for jewelry; it's also a reliable investment. However, buying physical gold comes with challenges like purity concerns, making charges, and security issues. Digital gold, on the other hand, carries platform risks. In this scenario, Gold Mutual Funds offer an option that is linked to the price of gold while also saving investors from these hassles.

Most importantly, you can invest in Gold Mutual Funds through SIPs (Systematic Investment Plans), and a demat account is not required. Let's understand in simple terms how this scheme works and who it's best suited for.

What is a Gold Mutual Fund?

A Gold Mutual Fund is a fund that doesn't buy physical gold directly but invests in Gold ETFs (Exchange Traded Funds). This means your money is linked to the price of gold through Gold ETFs. This allows you to benefit from rising gold prices without actually buying physical gold.

Investment without a Demat Account
People often think that a demat account is necessary for digital gold investments. While you do need a demat account to buy Gold ETFs, a demat account is not required for Gold Mutual Funds. You can buy them just like any other mutual fund.

Build a Strong Gold Investment with SIPs
The biggest advantage of Gold Mutual Funds is the SIP option. You can start investing with small amounts every month. This helps average out the impact of market fluctuations and increases the potential for better returns in the long run. For those who don't want to invest a lump sum, SIPs are the easiest way.

No Worries About Gold Purity
The biggest concern with physical gold is its purity. Investment in Gold Mutual Funds is linked to ETFs backed by 24-karat gold. There are no worries about purity. There are also no making charges or storage hassles.

Complete Security, No Fear of Theft
Keeping gold at home increases the risk of theft or the cost of a locker. But with Gold Mutual Funds, you don't need a safe or a locker; your investment is completely digital and secure.

How is it taxed?

The taxation on Gold Mutual Funds is similar to that of debt funds.
Selling before 24 months attracts short-term capital gains tax.
Selling after 24 months attracts long-term capital gains tax.
Tax rules may change from time to time, so be sure to check the information before investing.

For which investors are Gold Mutual Funds suitable?
Those who want to invest in gold but do not want to buy physical gold.
Those who want to invest gradually through SIPs.
Those who do not have a demat account.
Those who want diversification in their portfolio.

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