Gold Bonds are great for investing in gold without the hassle of managing physical custody or losing wastage and making charges. You also get a small interest payout with Sovereign Gold Bonds. Gold is a good hedge in uncertain times and high inflation.
Compared to PPF, they give much lower interest. The interest paid is taxable but upon redemption the proceeds are not taxable.
Equity Mutual Funds are volatile in the short term but in the long run have outperformed PPF and Gold. You pay a small 10% tax on long term capital gains (after the first one lakh gain) and the returns are higher in the long run.
Fundamentally, you should have a mix of all these three assets in a well constructed portfolio:
- Debt in classes like PPF, Liquid Funds to provide liquidity and a cushion against volatility.
- Gold as a hedge against inflation.
- Equity Mutual Funds for long term growth.
The composition will vary based on your life cycle stage and risk profile. You an take a free risk profile here to find out.
