Sovereign Gold Bond - An Golden Investment Opportunity

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Sovereign Gold Bond (SGB) are the bonds issued by the Reserve Bank of India every year. The price of the bond is fixed based on the average 3 days price of 1gm gold before the date of issue. Therefore single bond price is equivalent to 1gm 24 carat gold market price.

Investment is Gold in India is considered as the safest investment as gold has given a very good return as per the past trends. Also, Gold is considered as a part of your diversified portfolio. Due to high interest of people the Government of India in the year 2015 started to Issue Sovereign Gold Bonds.

There are various benefits of Investing in Sovereign Gold Bonds which are as follows:

  • Interest at the rate 2.5% p.a. - RBI provides an interest at the rate 2.5% p.a. which is paid semi annually. This means that your investment will gain interest approximate equal to interest in the saving bank account along with capital gain with the rise in the price of gold.
  • Exempt Capital Gain - These bond are issued for a period of 8 years after which they are redeemed. Any Capital Gain arising from such redemption is exempt subject to holding of the bond till maturity.
  • No Risk of theft - As the bond is held digitally there is no risk of theft as compared to physical gold.
  • Available to be traded - The bond can be held in the demat account as well and can be available to be traded in the market. But the capital gain arising from sale in market would not be exempt, however the benefit of indexation will be available.
  • Can be used as collateral for loan - SGB can be used as a collateral security for taking loans from bank.
  • No risk of fraud - As the bonds are issued by RBI there is no risk of fraud.

Some Important Points:

  1. The quantity of bonds that can be purchased from RBI has a limit of minimum 1gm to maximum 4kg i.e., Minimum 1 Bond to Maximum 4000 Bonds.
  2. The tenure of the Bond is 8 years although one can sell in the secondary market. Also RBI provide an opportunity for redemption after 5 years.
  3. PAN Number is compulsory required for subscribing the bond.
  4. No physical delivery of the Gold will be available.

Disclaimer : The above blog is not an investment advice. It just mentions the opportunity available, it's advantage and requirements.