In India all house have a dream of buying lots of gold, jewelry for their children wedding, and used on dress, saree which give shine.
But in now days gold price are increasing day by day. Common people not able to get gold jewelry because of price rise. Salary not increasing to beat the inflation.
Some people want gold but don’t want physical gold because of storage problem also fear of theft. For this there is one option available in the market that is Sovereign Gold Bond.
To understand this lets look in full depth of this bond.
What is Sovereign Gold Bond
Sovereign Gold Bond is bond issue by RBI on behalf of the government of India. It is not a physical gold. It is certificate that is issue by RBI. If you have this certificate then it is mean that you purchase a gold which is not physical but you can sell that gold after some time of period.
How to buy Sovereign Gold Bond
RBI allow sale of this bond to all commercial banks, Post office , stock exchange market like BSE, NSE etc. You can also sell this gold bond on the stock exchange market. All commercial banks allowing to buy gold bond online through net banking. It provide buyer to buy bond easily without any hassle.
What is the price of Gold Bond in India
The nominal value of gold bonds shall be fix on the basis of simple average of closing price of gold of 999 purity published by Indian Bullion and Jewelers Association Limited for last three days of week preceding the subscription period. Price of sovereign gold bond is depend on the current market price of gold. Current price of gold bond is Rs. 4,612 for online purchase and for offline purchase price is Rs.4,662. This given price is for March 2021. It may vary further depending on the market situation.
Price of gold bond vary every year it is not fix. It totally depend on the price of gold at the actual time when gold bond issue.
Holding period for Gold Bond
The maturity period for gold bond is Eight year. However you can sell your bond after Five year. It depend on you when you want to take exit.
How much we can buy Gold bond
You can buy Maximum 4 kg and minimum 1 gram for individual. For Hindu Undivided Family (HUF) it is 4 kg and 20 kg for trust. It is for fiscal year.
What is return on Gold Bond
Sovereign gold bond gives 2.5% interest rate annually. It applicable when bond is issue to the investor. Interest credited semi annually in bank account of investor. Plus point here is Interest rate. Whereas when you purchase physical gold it not give this interest rate which you get in gold bond. Gold bond also do not have a storage cost as compared to the physical gold.
When you sell this bond after some year that time you will get the price of gold which is actual at the time of sell.
For Example. You purchase the gold bond at the price of 4612Rs for one gram in march 2021.And you plan to sell this bond in March 2029.In March 2029 gold price is Rs.6200 per gram. Then you will get price per gram is Rs. 6200.
Here is your profit= Rs.6200 – Rs 4612 = Rs.1588 for one gram.
(Note – Above given example is for understanding purpose, we are not predicting the future price of gold.)
Is there any risk in investing SGB
The SGB Scheme is less risky. There is only risk of capital loss if gold price decrease. However investor will not lose in terms of unit of gold which he got during the purchase.
Who can invest in SGB
Person live in India as defined under Foreign Exchange Management Act ,1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions
Date of Issue
The date of issuances shall be as per the details given in the calendar below for 2020-21.
|Sr. No.||Tranche||Date of Subscription||Date of Issuance|
|1.||2020-21 Series VII||October 12 – 16, 2020||October 20, 2020|
|2.||2020-21 Series VIII||November 09 – 13, 2020||November 18, 2020|
|3.||2020-21 Series IX||December 28 2020 – January 01, 2021||January 05, 2021|
|4.||2020-21 Series X||January 11-15, 2021||January 19, 2021|
|5.||2020-21 Series XI||February 01- 05, 2021||February 09, 2021|
|6.||2020-21 Series XII||March 01- 05, 2021||March 09, 2021|
Benefit of Sovereign Gold Bond
- It is safest investment.
- There is no storage charges.
- Zero risk of handling physical gold.
- Bond will be tradeable on stock exchange within a fortnight of the issuance on a date as notified by the RBI.
- Bond is in digital format.
Unique features which make SGB more attractive
1. Fixed interest along with capital gain.
2 .No Expenses
3. Government guarantee, no chance of default.
4.Loan against gold bond.
Sovereign Gold Bond vs Gold ETF
|Particulars||Sovereign Gold Bond||Gold ETF|
|Returns||More than actual return on gold||Less than actual return on gold|
|Tradability||Can be traded and redeemed from the fifth year with the government||Tradable on stock exchange|
|Purity||High due to its existence in electronic form||High due to existence in electronic form|
|Loan||It can be used as collateral to avail a loan||Once can avail a loan against their Gold ETFs.|
In India gold is an asset with social and emotional value attached to it. Most of the people in India desire to hold more gold in their house. Holding physical gold comes with certain risks and cost. Hence to replace this gold bond is good option. It is good replacement of physical gold. It is also have minimum holding option which leads to attract every small investor.
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