Why More Indians Are Choosing Mutual Funds and SIPs Over Gold and Real Estate
Why More Indians Are Choosing Mutual Funds and SIPs Over Gold and Real Estate
Indians are changing how they save and invest. A growing number are moving from traditional choices like gold and property to mutual funds, especially through Systematic Investment Plans (SIPs). This shift is driven by better access to digital investing, strong mutual fund flows, record participation in SIPs, and changing returns across asset classes.
What the latest numbers show
- SIP contributions are at record highs. In July 2025, Indians invested ₹28,464 crore via SIPs—the highest monthly SIP collection on record, as per AMFI. Active “contributing” SIP accounts reached 9.11 crore.
- Equity mutual funds keep getting money. Equity MF net inflows hit a record ₹42,702 crore in July 2025, even as foreign investors sold Indian stocks that month. Total mutual fund AUM rose to a new high.
- Gold is very expensive—and demand is cooling. Gold prices in India hit record highs in August 2025, crossing ₹1 lakh per 10g, which dampened jewellery demand. The World Gold Council expects India’s 2025 gold demand to be the lowest in five years as high prices hurt buying.
- Property remains steady but not runaway. Multiple trackers show housing prices rising at a moderate pace (India ranked mid-table globally in Q1 2025; BIS real price index also points to gradual gains). Sentiment is improving, but growth is measured.
Why SIPs and mutual funds are winning
- Start small, stay consistent
SIPs let investors begin with a few hundred rupees and invest monthly—like a recurring deposit—building a disciplined habit without timing the market. AMFI explains SIPs in this exact “small steps” way, which has helped bring first-time savers into markets. - Rupee-cost averaging reduces stress
Because SIPs buy more units when prices fall and fewer when they rise, the average purchase cost smooths out over time. This suits salaried Indians who prefer steady contributions over lump-sum bets. - Digital rails = easy investing
e-KYC, UPI autopay, and app-based onboarding have cut paperwork and friction. The result: crores of SIP accounts have been opened and are actively contributing each month. - Professional management and diversification
Mutual funds pool money and spread it across many securities. For most households, this is simpler than picking individual stocks, buying gold in tranches, or scouting property. - Liquidity and transparency
You can redeem mutual fund units quickly at transparent NAVs. Property sales can take months and involve high costs; physical gold has making charges and purity concerns, while prices can vary by city and store. (Industry and regulatory disclosures through AMFI/SEBI also improve visibility for MF investors.)
How gold and real estate look today
- Gold: Prices are near lifetime highs. That’s good for past holders, but new buyers face high entry costs, so many are switching to gold ETFs or to SIPs in equity funds for potential long-term growth. WGC notes weaker jewellery demand in India in 2025 because of the surge in prices.
- Property: Demand is healthy in many cities and sentiment has improved, but price growth is moderate at the national level and can be very local. Reports show steady—but not explosive—gains and improving rents, especially in select markets. Property still needs large upfront capital, loans, and transaction time, which doesn’t suit all investors.
What this shift means for Indian households
- More financialisation of savings: Even though physical assets still occupy a big share, rising SIP participation shows a structural move towards financial assets and market-linked products.
- Better diversification: Households that once focused on gold and one home are adding equity and hybrid funds, spreading risk across asset classes.
- Smoother cash flows: SIPs align with monthly incomes, helping families invest first and spend later.
- Long-term wealth creation: Staying invested through market cycles (via SIPs) has historically rewarded patience better than trying to “time” gold purchases or property cycles.
Practical tips if you’re considering the switch
- Match goals to funds:
- Short-term (≤3 years): consider low-volatility options like liquid/ultra-short-duration funds.
- Long-term (≥5–7 years): equity or equity-heavy hybrid funds via SIPs for growth potential.
- Use SIP step-up: Increase your SIP by 5–10% each year as your salary grows.
- Don’t abandon diversification: You can still keep some allocation to gold (ETFs/SGBs) and maintain emergency cash; property can be a consumption asset (self-use home).
- Monitor costs and risk: Check expense ratios, track records, and your own risk tolerance.
- Stay data-driven, not headline-driven: High gold prices or a hot property market can tempt short-term decisions. Stick to your plan.
The bottom line
SIPs and mutual funds are winning because they are simple, digital, liquid, and scalable for the average Indian saver. With record SIP inflows and crores of active accounts, this trend looks durable. Gold and property still have roles, but in a modern portfolio, more Indians are giving monthly SIPs the driver’s seat for long-term wealth building.
Sources
- Association of Mutual Funds in India (AMFI): SIP book and monthly notes (July 2025).
- Reuters on equity MF inflows (July 2025 record).
- World Gold Council / Reuters on India gold demand and prices (2025).
- BIS real residential property price index (Q1 2025).
- Knight Frank/NAREDCO sentiment updates; ET housing price context (Q1 2025).
Also read; Urban Company IPO: What Every Indian Investor Should Know About GMP
Last Updated on: Tuesday, September 9, 2025 4:46 pm by Business Max Team | Published by: Business Max Team on Tuesday, September 9, 2025 4:42 pm | News Categories: Economic
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