Investment
Contents
Gold vs Mutual Fund
No Sign-Up. No Paywall.
FREE TO USENO LOGIN REQUIREDUPDATED FY 2025–26
Traditional store of value vs equity growth — how both fit into a long-term portfolio.
Visual Comparison
Key Differences
| Feature | Gold | Equity Mutual Fund |
|---|---|---|
| Historical return | 8–10% CAGR (10yr avg) | 11–14% CAGR (10yr avg) |
| Risk | Low — safe haven | Market risk |
| Inflation hedge | Strong | Moderate |
| Liquidity | High (SGBs have lock-in) | High (3-day redemption) |
| Tax | 20% LTCG (3yr+) with indexation | 12.5% LTCG above ₹1.25L after 1yr |
When to Choose Which
Choose Gold
- Portfolio diversification (5–15% allocation)
- Hedge against currency/inflation
- Uncertain macro environment
- Physical + sovereign gold bonds
Choose Equity Mutual Fund
- Primary wealth creation vehicle
- Long-term goals (retirement, education)
- You can handle 3–5 year downturns
- Building inflation-beating corpus
Frequently Asked Questions
For primary wealth creation, equity mutual funds have historically outperformed gold. Gold serves better as a 5–15% diversifier and hedge.
SGB is a RBI-issued bond denominated in grams of gold. It offers 2.5% p.a. interest + gold price appreciation. Tax-free if held to maturity.
Over very long periods (20+ years), gold has broadly maintained purchasing power. But it can underperform equity significantly over 5–10 year periods.
Gold is generally considered safer (less volatile). But equity mutual funds (especially index funds) have historically delivered better inflation-adjusted returns over 10+ years.
Most financial planners suggest 5–15% in gold as a diversifier, not as the primary investment.