Sovereign Gold Bonds: A Good Opportunity For Those Who Love Investing In Gold

Since last few months, it has been noticed that many Indians have started investing in Sovereign Gold Bonds more as compared to physical gold but why is it so? This is because these sovereign gold bonds serve as a perfect alternative of physical gold and have a lot of good features that will make your investment highly profitable along with capital protection as these bonds are issued by Reserve Bank of India on behalf of government.

Generally, the Sovereign Gold Bond comes with a tenure of eight years, but one can redeem his/her capital or exit the scheme as per the convenience from the fifth year, i.e., after five years from the date of issuance.

Traditionally, the people of our country majorly invested in gold, but as now financial advisors suggest their clients to invest in different types of gold investment products (Gold ETFs, SGBs, Gold Mutual Funds, or Digital Gold), investors are being inclined towards these products to diversify their investments.

A Sovereign Gold Bond is a type of government bonds that offers the possibility to be changed into dematerialised form. Its value is defined according the weight of gold it holds. For example, if you have purchased a 100 gram gold bond, then its price will be equal to the current price of 100 gram gold valued as per the market.

However, to make a firm decision and right investment, we all need to know about why we should invest in a particular product, and this is why, we are now going to list the reasons why one should opt for this type of investment and choose the best investment bonds in India:

  • Currently, the investors are given a fixed interest of 2.5% each year which is paid semi-annually
  • The investor does not have to worry about storing them as the option of keeping them in demat account is provided
  • It is also possible to trade them on stock exchanges if the investor wants to sell them off
  • As compared to other gold investment products, no GST is needed to be paid on the investment made in SGBs, in addition, there is no making charge on SGBs
  • One can also take loans by using SGBs as a collateral

Eligibility criteria for investing in SGBs

A Resident of India can invest in an SGB. Other eligible parties are:

  • Individuals
  • Charitable institutions
  • Hindu Undivided Families
  • Universities and;
  • Trusts

Is it a good idea to invest in SGBs?

As we all know that gold is considered to be a hedge against inflation, it also has a high liquidity no matter what the conditions are. It is important for an investor to have some gold instruments in his portfolio. As per the experts’ opinion, SGBs are very profitable and secure as they ensure constant income during its tenure along with capital protection. So, to beat inflation and diversify your portfolio, we advise you to make investment in gold bonds India.

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