How to Invest in Gold: ETFs, Funds, and Digital Options

Learn how to invest in gold through ETFs, mutual funds, and digital gold options. Discover affordable alternatives to physical gold investments.

Sam

20 Nov 2025 — 5 min read

Gold, often dubbed the "universal currency", has long been a cornerstone of financial stability and wealth preservation. Yet, for many, the traditional approach of purchasing physical gold – jewelry, coins, or bars – may not align with modern investment goals or budgets. In an era where gold prices are soaring and alternative investment options are flourishing, it’s time to rethink how we incorporate this precious metal into our portfolios.

This comprehensive guide explores the expert insights shared by Revanth, a certified wealth manager, on navigating gold investments beyond traditional routes. With an emphasis on ETFs (Exchange-Traded Funds), gold-based mutual funds, and digital options, this article provides practical strategies for diversifying your investments, minimizing risks, and leveraging modern tools to achieve financial security.

Why Gold Remains a Timeless Investment

Gold is much more than a shiny metal; it’s an asset that provides stability during economic uncertainty. In the past year alone, gold prices have surged by over 40%, driven by inflation, geopolitical tensions, and fluctuating equity markets. While this makes gold an attractive investment, there’s no denying the challenges of owning it in physical form:

High upfront costs: With gold prices exceeding $1,800 per ounce in some cases, purchasing even small amounts requires significant capital.
Making charges and taxes: Buying gold jewelry often incurs high making charges and GST (Goods and Services Tax), reducing its resale profitability.
Storage and security risks: Physical gold requires secure storage, either at home or in a bank locker, both of which involve costs and risks.

Given these challenges, investors are increasingly turning to non-physical gold investments like ETFs, gold mutual funds, and digital gold. These alternatives offer accessibility, flexibility, and liquidity while maintaining exposure to the metal’s performance.

Exploring Gold Investment Alternatives

1. Gold ETFs: The Flexible Investment Option

Gold ETFs are funds that track the price of gold in real time and allow investors to buy and sell units on the stock exchange. Here are some key advantages:

Low entry barrier: Unlike physical gold, you can start investing in gold ETFs with as little as $100 or less.
Liquidity: ETFs are traded on exchanges, meaning they can be easily bought or sold during market hours.
No storage concerns: Since ETFs are held in a dematerialized (Demat) format, there’s no need for physical storage or associated risks.
Transparent pricing: ETF prices closely follow global gold rates, ensuring fair market value.

However, investors should be aware of minimal costs like expense ratios (typically between 0.03% and 0.30%), which could slightly affect returns over time.

2. Gold-Based Mutual Funds

Gold mutual funds invest in ETFs or gold mining companies, making them a slightly more diversified option. These funds are actively managed, meaning professional fund managers adjust holdings based on market conditions to maximize returns.

Ideal for long-term investors: If you’re looking to save for significant life events (e.g., a child’s education or marriage), gold mutual funds allow you to make small monthly contributions via Systematic Investment Plans (SIPs).
Simplicity: These funds don’t require a Demat account and are managed by professionals, making them beginner-friendly.
Potential for higher returns: Actively managed gold funds may provide additional returns by investing in related assets like bonds or mining stocks.

3. Digital Gold: The Modern Approach

Digital gold provides a simple and tech-savvy way to own gold without physically possessing it. Through platforms like payment apps, you can buy gold in fractions and even redeem it for physical gold later.

Convenience: Purchase gold anytime, anywhere, via your smartphone.
Low investment threshold: Start with as little as $1, making it accessible to everyone.
Guaranteed backing: Most platforms store an equivalent amount of physical gold in secure vaults, ensuring your investment is real.

While digital gold offers flexibility, it’s worth noting additional costs such as GST and selling price discrepancies when redeeming physical gold.

Overcoming Common Gold Investment Myths

Despite the availability of modern gold investment tools, many investors hesitate to move away from traditional methods due to longstanding beliefs. Let’s address some common misconceptions:

"Physical gold is safer and more reliable."
False. Alternatives like ETFs and mutual funds are regulated, ensuring transparency and security. They also eliminate risks like theft or quality issues associated with physical gold.
"Digital gold and gold ETFs are the same."
Not true. While both eliminate physical storage requirements, ETFs are traded on exchanges and typically incur lower transaction costs compared to digital gold.
"Gold doesn’t deliver good returns."
Historically, gold has served as a hedge against inflation, offering returns that outpace it. While it may underperform equities in the long run, gold remains crucial for portfolio diversification.

How Much Gold Should You Include in Your Portfolio?

Proper asset allocation is essential to maximizing returns while minimizing risk. For most investors, financial experts like Revanth recommend allocating 10% of your portfolio to gold investments. This percentage strikes the right balance between stability and growth.

Here’s why:

Gold hedges against market volatility: While equity markets can be unpredictable, gold tends to perform well during downturns, providing a safety net.
Inflation protection: Gold typically outpaces inflation rates, ensuring your purchasing power remains intact.
Diversification: Gold is inversely correlated with other asset classes, making it a valuable addition to a well-rounded portfolio.

Key Takeaways: Rethinking Gold Investments

Gold ETFs and mutual funds provide cost-effective, flexible alternatives to physical gold.
Digital gold offers convenience but may involve higher transaction costs compared to ETFs.
Avoid high storage, making, and resale costs associated with physical gold by opting for non-physical investments.
Allocate approximately 10% of your portfolio to gold for optimal diversification and risk management.
Regularly monitor gold prices and market trends to make informed decisions.
Begin small: Both ETFs and digital gold allow investments as low as $1, making them accessible to all.
Consider long-term goals: SIPs in gold mutual funds can help save for life events while creating steady wealth.

Wrapping Up: A New Era of Gold Investing

Gold investments have evolved significantly, offering a variety of options that suit different financial goals and risk appetites. Whether you’re saving for your child’s future, building a retirement fund, or simply seeking stability during market upheavals, gold ETFs, mutual funds, and digital gold provide modern, practical alternatives to traditional methods.

By embracing these tools, you can enjoy the benefits of gold ownership without the challenges of storage, high costs, or liquidity concerns. As Revanth aptly puts it, "Investing in gold today doesn’t mean buying jewelry tomorrow - it means using smarter, simpler methods to secure your financial future."

The world of gold investments has never been more accessible. The time to diversify and modernize your portfolio is now. Are you ready to unlock the golden opportunities that await?

Source: "Best Way to Invest in Gold | Investing in Gold for Beginners | Gold Mutual Funds & ETFs | Revanth" - SocialPost Finance, YouTube, Sep 6, 2025 - https://www.youtube.com/watch?v=UiRKZ8RWZmE