Starting to invest? A comparison of mutual funds and gold for beginners
Choosing a first investment instrument often confuses novice investors. Mutual funds and gold are both popular, but they have different characteristics, risks, and investment objectives.
The Financial Services Authority (OJK) reminds investors to understand their risk profile and product characteristics before placing funds. Mutual funds themselves have several types with different risk levels, ranging from money market to equity funds.
Mutual funds for novice investors
A mutual fund is a vehicle that pools public funds to be managed by an investment manager into a portfolio of securities or other instruments according to the type of mutual fund.
For beginners, money market mutual funds are often the choice because they carry relatively lower risk compared with other types of mutual funds. The OJK also cites money market mutual funds as one of the low-risk capital market instruments.
Some advantages of mutual funds for novice investors include:
- Can be started with relatively affordable funds
Investors do not need large capital to begin investing.
- Managed by an investment manager
Investors do not need to select and manage all assets in the portfolio directly.
- Wide product choice
There are money market, fixed income, balanced, and equity mutual funds with different risk characteristics.
- Easier diversification
Investor funds can be placed in a number of instruments according to product policy.
- Practical
Mutual funds can be purchased and monitored through platforms that provide official investment services.
Disadvantages of mutual funds
Although relatively easy, mutual funds still carry risk. Some of the disadvantages are:
- Investment value can fall
Mutual funds are not products with guaranteed returns.
- Different risks for each type
Equity mutual funds, for example, carry higher risk than money market mutual funds.
- There are certain fees
Investors need to understand the fees stated in the product prospectus.
- Investment returns are uncertain
Past performance does not guarantee future results.
- Need to understand the product
Investors must still read the prospectus and know where funds are placed.
The OJK also stresses the importance of investors reading the prospectus and understanding their risk profile before investing.
Gold for novice investors
Gold has different characteristics from mutual funds. Gold is generally seen as an asset for storing value over the long term and can be purchased in physical form or through digital gold services provided by official providers.
In 2026, the OJK also issued regulations on mutual funds in the form of collective investment contracts whose units are traded on the exchange with gold as the underlying asset. This shows the increasingly diverse range of gold-related investment options in the financial market.
Some advantages of gold for novice investors include:
- Easy to understand
Gold is an asset that has long been familiar to the public.
- Can serve as diversification
Gold can be used as one part of an investment portfolio.
- Does not depend on the performance of a single company
Unlike investing in shares of a particular company.
- Can be owned physically
Investors can buy gold bars as an asset.
- Suitable for long-term goals
Gold is more often used as a store of value instrument than for pursuing quick profits.
However, gold also has a number of disadvantages, including:
- Price can fluctuate
The price of gold does not always rise and still carries the risk of decline.
- Does not generate regular income
Gold does not provide interest or dividends like some other investment instruments.
- There is a spread between buying and selling prices
Investors need to account for the spread when buying and selling gold.
- Profit depends on price increases
Investors only make a profit if the selling price is higher than the purchase cost and other costs.
So, mutual funds or gold?
There is no single instrument that is automatically better for all novice investors. The choice should be tailored to investment objectives, time horizon, risk tolerance, and individual financial circumstances.
If you want an investment that is practical and managed by professionals, mutual funds can be a choice. However, the type of mutual fund must still be matched to your risk profile.
Meanwhile, gold can be considered by investors who want an asset for diversification and long-term value storage.
Novice investors also do not have to choose one absolutely. By understanding risk and financial goals, both can be part of a diversified portfolio.
Most importantly, do not choose an investment just because it is popular or because you see other people’s profits. Understand the product, check the legality of the provider, read product information, and match the investment to your financial capacity.