There is no making charge on SGB and there is no worry about accuracy. Investors have to pay making charges when buying gold in the form of jewellery.
Gold has been known to be one of the oldest and traditional investments in India. But now many different options for investing in gold have come in the market. Despite the price and other options available, Indians prefer physical gold i.e. jewelery etc. But there are safer options available like Sovereign Gold Bonds (SGBs) and Gold ETFs (Exchange Traded Funds) launched by the government. If you want to be free from the worry of theft, purity and secure storage, you should avoid buying physical gold. To invest in gold in gold, the government continues to issue such options to the people from time to time.
Sovereign gold bonds and gold ETFs are very attractive options for long-term investments, as they offer benefits like capital gains (tax exemption) along with 2.5 per cent interest per annum. In such a situation, the question will be in your mind that what is the way of investing in it, how beneficial is it to invest in it, then come here to know all the answers.
Why Invest in Sovereign Gold Bonds?
Sovereign Gold Bonds are issued by the government at regular intervals. SGBs are issued at the current price of Gold. SGB is invested for eight years. It has a lock-in period of five years. SGB cannot be sold in these five years. But the SGB can be sold after the completion of the lock-in period of five years. If you hold SGB till maturity, there will be no capital gains tax on the investment. You will get interest at the rate of 2.5% per annum on investment in SGB. This interest will be paid on half yearly basis.
How much do you get for selling?
On investment in SGB, the amount of gold paid for, on redemption or premature redemption, the investor gets an amount equal to the market price of the same gold. Redemption means selling SGB. Apart from this, there is also an option to take physical gold in SGB. Buying gold in the form of bonds also reduces the risk and cost of storage. In this, investors are assured that they will get the market price of gold at the time of maturity.
Is there any making charge on Sovereign Gold?
Apart from this, there is no making charge on SGB and there is no worry about accuracy. Investors have to pay making charges when buying gold as jewellery. There is also concern about the purity of gold. To remove the fear of losing, these bonds are kept in Reserve Bank of India (RBI) book or demat mode.
How good is long term investment
Experts say that for investors who intend to hold the bond till maturity, SGB is a better instrument for long-term investment. Sovereign gold bonds can be sold in the secondary market. The secondary market means that the SGB can be sold to other financial institutions rather than from where it is bought.
Who can invest in
Any common person can buy Sovereign Gold Bond. Apart from this, trusts, charitable trusts, universities and Hindu Undivided Family (HUF) can also invest in sovereign gold bonds. A person is required to buy a bond of at least 1 gram. A person can buy a maximum of 400 grams of gold bonds in a year.
Who issues Sovereign Gold Bond?
RBI issues Sovereign Gold Bonds on behalf of the Government of India. RBI fixes the price of the bond on the basis of 99.9% accuracy and the simple average market closing price of the last three days. These Gold Bonds can be bought and sold through all banks, select branches of post office, Stock Holding Corporation of India Limited, recognized stock exchanges, National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
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