Through centuries, human civilization has chosen to possess gold for a plethora of reasons. Gold has always been a metal we depend on when markets and currencies fail us. It has been positioned as a form of insurance when the going gets tough. Today, there are many ways in which one can invest in gold apart from physical purchases, like investing in gold mutual funds, gold ETF mutual funds, and more! 

What are Gold ETFs and How are They Different from Mutual Funds? 

ETFs, invest in gold bullion with 99.5% purity. This means that investing in ETFs is quite like purchasing the physical metal itself. So, if you are planning to accumulate gold through the years for the long term, ETFs are a better option than actually buying physical gold or investing in gold funds for that matter! 

Gold mutual funds invest the amount in the stocks of companies that are linked to the mining of gold, processing and fabrication, and even distribution of the yellow metal. Unlike ETFs, the performance of these gold funds depends on the fluctuation in share prices of these companies. Whereas the returns from ETFs depend on the performance of the metal itself, the performance of gold funds is associated with the status of the gold industry and its performance. 

Gold mutual funds can be invested in through SIPs and they possess the capability to offer handsome returns due to active management by fund managers. ETFs on the other hand mirror market indices and therefore returns are not as substantial as mutual fund investments. They are listed on the index and offer instant liquidity as and when needed. You can sell them for the current price of gold, instantly!

Why is Gold a Great Choice for Balancing Market Volatility? 

If market volatility and inflation are major concerns for you, investing in gold could seem like a haven. Although gold investments can prove to be just as volatile in the short term, when considered for the long term, gold holds its ground with remarkable stability and poise. Depending on your personal preferences as well as your risk appetite, you can choose to invest either in ETFs or physical gold or prefer gold funds, options, futures, or contracts. 

Irrespective of the form of gold investment you choose. Investment specialists suggest not allocating over 10% of your total assets to gold. This is because as markets begin to improve post a crash, investors are likely to move to riskier assets for garnering more profits. As a result, the price of gold may begin to struggle. 

Be it mutual fund investments or investments of any other form, they are all subject to market risks. Gold is not an exception. However, the golf markets are idiosyncratic and also not as forgiving and therefore it does take longer or gold to respond to the sways of the market. This makes gold mutual funds and ETFs stellar choices for investors looking out for stability in their portfolios and sparkling gains in the years to come!