Rs 1 Lakh In Gold Vs Mutual Funds In 2020 — What Are They Worth Today?

In the Indian household, few investments evoke as much tradition and debate as gold. It has been the go-to investment option for generations of savers. Yet, in the digital age of SIPs and demat accounts, mutual funds have emerged as the modern darling for wealth building. 

What if we rewind to early 2020: a time when the world was reeling from the onset of COVID-19 and uncertainty reigned supreme? Imagine you had Rs 1 lakh to invest on Jan. 1, 2020. Would you have tucked it into gold or diversified it across equity mutual funds?

At the start of 2020, 24-karat gold cost approximately Rs 3,920 per gram. An investment of Rs 1 lakh would have fetched you about 25.51 grams.

Currently, the price of 24-karat gold stands at roughly Rs 12,584 per gram. The value of 25.51 g of 24-karat gold now stands at Rs 3,21,017.

Thus, the value of a Rs 1 lakh investment in gold on Jan. 1, 2020, would have become threefold by November 2025. 

Gold remains India’s preferred safe-haven asset due to its inflation hedge and intrinsic value, especially during economic uncertainties.

On the other hand, suppose you had invested the same amount in a mutual fund. Assuming an annual interest rate of 12%, it would have grown into a corpus of Rs 2.07 lakh.

Mutual funds in India encompass a wide array of schemes, from large-cap equity to mid-cap, small-cap, balanced, and hybrid funds. The returns vary depending on the fund type and market conditions.

Unlike gold, mutual funds offer diversification across sectors and companies, reducing the risk associated with any single asset. Additionally, mutual funds provide tax advantages through equity-linked savings schemes (ELSS) and systematic investment plans (SIPs), making them attractive for long-term wealth creation.

Investors aiming for long-term wealth should consider their risk appetite and investment goals, potentially blending both gold and mutual funds for balanced portfolio growth.

Ultimately, your choice depends on your risk tolerance and investment horizon. The last five to six years have demonstrated that both assets have a vital role in building long-term wealth in India.