Are Gold Mutual Funds a Good Investment in 2025? Pros and Cons Explained

Gold has always had a special place in Indian hearts, especially every woman’s heart, be it weddings, festivals, gifts from our moms, or just for investment. But today, women are not just buying gold for jewellery. We’re also thinking about how to grow our money smartly, right? And that’s where Gold Mutual Funds come in!

In 2025, 10 grams of 24k gold prices created history by crossing the ₹1 Lakh mark. This depicts how gold prices are rising, and in uncertain markets, many women are wondering if investing in gold through mutual funds is a safe and simple way to save and grow their money. This blog will help you understand “Are gold mutual funds a good investment?”, “What are gold funds? Gold mutual fund pros & cons, in super-easy language!

What Are Gold Mutual Funds?

Gold mutual funds are a type of investment where your money is used to buy gold in electronic form. You don’t get actual gold to wear, but you get the value of gold in your investment. These funds usually invest in Gold ETFs (Exchange Traded Funds).

You know the best part of investing in a gold mutual fund? Yes, you can start investing with as little as Rs 100 either through SIP or lump sum. You can check out the Lxme app – investment for women and look out for Rs.100 Gold Fund, which is well-researched and curated by experts.

What are the Features of the Gold Mutual Fund?

• They are professionally managed funds that invest in gold assets such as Gold ETFs, and in turn, Gold ETFs invest in physical gold on your behalf.
• They are a pure form of investment, hassle-free, and fairly valued.
• There are no additional costs involved, like GST, making & design charges, storage charges, etc. Moreover, there are no risks involved, like the risk of theft or purity. Unlike when you go to buy traditional gold jewellery. Gold mutual funds just charge a small percentage of the expense ratio to manage the funds.
• You don’t need a huge amount of money to invest in gold mutual funds; you can start with as little as ₹100.
• Gold Mutual Funds offer flexibility in investing, as there are two ways to invest: lump sum and SIP.

What are the Pros of Gold Mutual Funds? 

1. Safe Haven During Uncertain Times

When the equity market is volatile, gold often stays strong. Generally, gold prices and equity markets have an inverse relationship, i.e., when equity markets go down, gold prices generally go up and vice versa. It gives a sense of safety. In 2025, with global uncertainties and inflation, gold is seen as a safe-haven investment option for the long term.

2. No Need to Worry About Storing Gold

Unlike physical gold/gold jewellery, you don’t have to keep or store gold mutual funds in a locker or worry about theft. Everything is in electronic format and secure.

3. Easy for Beginners

You don’t need to open a demat account. You can invest easily through the Lxme app; you just need to have an investment account, and you are ready to invest without any hassle. Just like exploring refer and earn website, this is a beginner-friendly way to earn and grow your money smartly.

4. Good for Diversification

Gold as an asset class helps your investment portfolio to hedge (protect) against inflation. Ideally, one can invest 5%-10% of their portfolio in gold. So, gold acts as good diversifier.

5. Affordable

As 10 gram 24k gold price has crossed ₹1 lakh, it seem overwhelming to invest in gold right? But, with gold mutual funds you don’t have to worry about it as you can start with as small amount as just Rs.100. So, even if you don’t have a lot of money, you can start investing with small amounts regularly.

6. Flexible

When you invest through gold mutual fund you get flexibility as you can invest anytime withdraw whenever you want, however, note that gold is a long term investment, one should stay invested for at least 3+ years to get desirable returns. 

7. No Extra Charges Like Physical Gold

With gold mutual funds, you avoid making charges, design charges, 3% GST, and locker/storage costs. Plus, there is no worry about gold purity, since the investment is purely based on the underlying asset, i.e., Gold ETFs.

What are the Cons of Gold Mutual Funds?

1. No Physical Gold

You can’t use this gold for wearing it as jewellery, because it’s not physical. It’s purely an electronic investment.

2. Expense Ratio

Since these are mutual funds, a small fee, known as the expense ratio, is charged for managing the fund.

3. You Might Miss Emotional Value:

Women often buy gold with emotional attachment for weddings, gifts, or as family wealth. Gold mutual funds don’t give you any emotional satisfaction as holding real gold jewellery does. However, it does help you earn better returns over the long term as you don’t have to pay many costs in case of a gold mutual fund.

If you’re a woman who is just starting her investment journey, investing in gold mutual funds can be a smart and safe step forward. Alongside, you can even explore small business ideas for women if you’re looking to boost your income while building wealth smartly.

But remember, gold mutual funds are not the only option. They should be a part of your investment portfolio, not the whole plan. Think of them as your diversifier — not the whole outfit!

FAQs

Further read:

• Gold Investment Plan: How to start investing in gold with just rs.100?
• How To Invest in Gold Mutual Fund Through SIP?
• Gold Mutual Funds vs Gold ETF: Understand the Difference