While gold has always been considered a safe haven investment, the importance of a long-term growth opportunity via equity mutual funds too has gained currency in recent years.
While gold has always been considered a safe haven investment, the importance of a long-term growth opportunity via equity mutual funds too has gained currency in recent years. Both modes of investment, however, come with their own set of pros and cons. Experts warn that before putting money in these, it is important to assess one's risk appetite, investment horizon and capital in hand.
Given the volatility in the equity markets, some experts consider gold to be a better investment.
“While mutual funds or any other investment options have their upsides, gold as a metal has shown tremendous growth in last 10 years,” says Aditya Pethe, Director, WHP Jewellers.
He expects gold to grow at a fast pace in the coming two years too.
“Even when the market will recover or gold prices will hit a correction it will be minor compared to the exceptional growth it has showcased,” he adds.
With the increase in gold prices, Vaibhav Saraf, Director, Aisshpra Gems and Jewels, says it is a good option to encash the highs in the market. Additionally, there are no documentations and intermediaries required in case of gold investment, which makes it an easy option.
On the other hand, investing in mutual funds require a great deal of planning and vigilance on the part of the investor.
Nevertheless, these don’t cut down the benefits of equity mutual funds completely.
A systematic investment plan (SIP) into a well-diversified equity-based mutual fund is the ideal way to invest small amounts at equal intervals and is capable of generating good returns, according to experts.
(Also read: How much tax you pay on your equity investments)
Given the historical outperformance of equity over all other asset classes in the long term and safe-haven nature of gold investments, Rahul Agarwal, Director Wealth Discovery/EZ Wealth, asks investors to keep both in the portfolio at any point in time. The proportion of these may depend on one’s risk appetite.
However, investors who do not have the capacity or tolerance for risky investments should avoid equity investments as they are subject to market risks.
Agarwal adds that portfolios currently should be created with a long term outlook.
"Extremely short term outlook or investment horizon is a certain recipe for disaster. We can be rest assured that markets will witness a lot of volatility therefore both gold prices and equity price action will gyrate on either side," he opines.
Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
First Published: IST