If you’re looking for a secure, low-risk way to invest in gold, then Sovereign Gold Bond (SGB) may be the perfect option for you. SGBs are government-backed bonds denominated in grams of gold, like Rs 5,000 per gram. The bonds are issued by the Reserve Bank of India (RBI) on behalf of the Government of India and can be purchased from banks, brokers, post offices, and online platforms. You also get a Discount if you buy them online if you have a demat account.
SGBs were introduced in 2015 under Gold Monetisation Scheme and have consistently provided investors with a return of over 2.50% each year, making them one of the most attractive investment options available. So, if you’re looking to invest in gold without the hassle of dealing with physical gold, SGBs may be the perfect solution.
Eligibility requirement for SGBs
To invest in SGBs, you must meet certain requirements. These include having a bank account, an Aadhaar card or PAN card, and being over the age of 18. You can purchase SGBs from any scheduled commercial bank, or through the Stock Holding Corporation of India. You can even purchase SGBs online.
Advantages of SGBs
There are several advantages to investing in SGBs, the biggest being the safety of your investment. SGBs are backed by the government, so you don’t have to worry about their value fluctuating. Additionally, SGBs are highly liquid, meaning you can buy and sell them quickly and easily. And, unlike physical gold, they don’t carry any transaction costs.
Disadvantages of SGBs
However, there are some disadvantages to investing in SGBs. For one, the value of your investment is subject to currency fluctuations. Additionally, long-term capital gains tax may be applicable when selling SGBs.
In summary, Sovereign Gold Bond is a secure and low-risk way to invest in gold. The bonds are backed by the government and provide investors with a return of over 2.50% each year. They are highly liquid and don’t carry any transaction costs. However, you should be aware of the potential risks involved, such as currency fluctuations and long-term capital gains tax.
1. What is the minimum permissible investment in an SGB?
The minimum permissible investment in an SGB is 1 gram of gold.
2. How can I purchase SGBs?
SGBs can be purchased from any scheduled commercial bank, or through the demat account.
3. How long does an SGB investment typically last?
SGBs have an 8-year maturity duration.
4. Is there a limit on how much I can invest in SGBs?
Yes, the maximum limit of subscribed shall be 4 KG for individuals, 4 Kg for HUF, and 20 Kg for trusts and similar entities per fiscal year (April-March) notified by the Government from time to time.
5. Will I incur any taxes on my SGB investments?
Long-term capital gains tax may be applicable when selling SGBs. If you exit after 5 years, capital gains tax will be applicable.