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Is it worth investing in Sovereign Gold Bonds?

Gold is regarded as a trusted form of investment by many. It is one of the most commonly purchased investments that you are acquainted with since you were a child. Traditionally, you have seen your family buy and gift gold at weddings because its value increases with time. If you have had a chance to discuss with your family, you would also know the costs and risks of purchasing and storing physical gold.

With the introduction of Sovereign Gold Bonds (SGBs) by the Reserve Bank of India (RBI), you can now invest in Sovereign Gold Bonds and enjoy the benefits of SGBs such as earning interest every year along with capital appreciation without having to store physical gold. Buying SGBs is one of the preferred alternatives to investment in physical gold.

Benefits of Sovereign Gold Bonds

SGBs are government securities denominated in grams of gold. Investors invest in SGB on the opening of the scheme, and it is redeemed on maturity with an option to redeem or trade before maturity.

Sovereign Gold Bond benefits are meant for you if you are new to investment or wanting to add variety to your existing portfolio. Gold manages to outclass other classes of assets when there is economic fluidity, geopolitical indecision or a debasement in the value of fiat currencies.

Sovereign gold bonds also offer tax benefits. When you hold on to SGB till maturity, the capital gain arising from the investment is exempted from long term capital gain tax. However, the interest earned shall be taxable.

Why make your next investment in Sovereign Gold Bonds?

In contrast to buying physical gold, there are more advantages of SGBs:

  • 0% loss in making charges against jewellery
  • No issue of purity of gold purchased
  • Capital appreciation linked to actual gold prices
  • Additional interest earned per annum
  • Elimination of risk and cost related to storing physical jewelry
  • Capital-gain tax benefits, if bonds are held till maturity
  • Hassle-free, convenient and easy
  • Dematerialised form of securities

SGB are traded through branches or offices of scheduled private banks, nationalised banks, designated post offices, scheduled foreign banks, Stock Holding Corporations of India Ltd. (SHCIL) and various authorised stock exchanges either directly or through their agents.

Deciding on which option to select while planning to invest your savings can be overwhelming. Likewise, getting to know the pros and cons before investing in SGBs can be a bit tricky for many. You can reach out to experts to help you with personalised financial solutions so that you can reach your financial goals through suitable investment options.

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