Sovereign Gold Bonds, Gold Saving Funds & Gold ETF
The Government of India introduced the Sovereign Gold Bond (SGB) Scheme in November 2015 to offer an alternative investment to physical gold. Over the years, the market has witnessed a considerable decline in the demand for physical gold. SGBs not only track the export-import value of the asset but also ensures transparency at the same time.
SGBs are government securities and are considered safe. Their value is denominated in multiples of grams of gold. SGBs have witnessed a significant increase in investors, with it being considered a substitute for physical gold. If you are looking to purchase an SGB, all you have to do is approach a SEBI-authorised agent or broker. Once you redeem the bond, the corpus (as per the current market value) will be deposited into your registered bank account.
WHO SHOULD INVEST IN SOVEREIGN GOLD BONDS
WHO SHOULD INVEST IN SOVEREIGN GOLD BONDS
You may consider diversifying your portfolio with at least 5%-10% in gold. As a low-risk investment, it is perfect for investors with a low-risk appetite. The cost to purchase or sell SGBs is quite low compared to physical gold. The expense of buying or selling the SGB is also nominal compared to the physical gold.
Those who do not want to go through the hassles of storing physical gold can also go for SGBs. This is because it is easy to store this in Demat form, and nobody can steal it as they are in electronic form.
FEATURES AND BENEFITS
FEATURES AND BENEFITS
1. Eligibility
Any Indian resident – individuals, Trusts, HUFs, charitable institutions, and universities – can invest in SGB. You may also invest on behalf of a minor.
2. Issuance of Bonds
Only RBI can issue SGBs on behalf of the Central Government, and they are traded on the Stock Exchange. It is issued in multiples of one gram of gold. Investors will receive a Holding Certificate for it. You can also convert it to Demat form.
3. Maturity Period
The maturity period of the sovereign gold bond is eight years. However, you can choose to exit the bond from the fifth year (only on interest payout dates).4.Sovereign Gold Bond Interest Rate/Return
The current interest rate for SGB is 2.50% per annum on your initial investment. It is paid twice a year (semi-annually) for 8 years, i.e. till maturity. Interest will be credited directly to your account, which you shared while investing. Returns are usually linked to the current market price of gold.