How to invest in SOVEREIGN GOLD BOND (India)



How to invest in SOVEREIGN GOLD BOND?

Recently Government of India has launched SGB (Sovereign Gold Bonds),  as an alternative to purchasing yellow metal Gold. This Sovereign Gold Bonds will be issued by Reserve Bank of India on behalf of Government of India and it offers an interest rate of 2.75% per annum. The main advantage in Sovereign gold bonds is, investor will get returns linked to gold price thus Sovereign gold bonds offers same benefit as physical gold and the risks and costs of storage are eliminated.


10 Highlights of Sovereign Gold Bonds (SGB’s).

1. Minimum investment in Sovereign Gold Bonds shall be 2 grams and maximum allowed is 500 grams.

2. These bonds can be bought only by Indian residents including individuals, HUFs, charitable institutions etc.

3. Investors have to pay the bond price in cash and these bonds will be redeemed in cash on maturity.

4. The tenor of Sovereign gold bond is for a minimum of 8 years, with exit option in 5th, 6th and 7th years. The redemption price will be based on market gold price.

5. The Sovereign Gold Bonds will be available in both demat and paper form, thus this bonds can be sold or traded on stock exchanges. This helps investors to exit even before five years.

6. Sovereign gold bonds can be used as collateral for loans from financial institutions.

7. Sovereign Gold Bonds will be sold through listed scheduled commercial banks and designated post offices. Investors can also open SGB in online mode in listed scheduled commercial banks.

8. In SGB, Capital gains considered as same like physical gold for an Individual investors according to his tax slab.

9. In SGB, Investors will get a fixed rate of interest and this will be credited every 6 months to the bank account of the investor and the final interest will be paid on maturity along with the principal.

10. The SGB investor will be advised one month before maturity of the bond. On the date of maturity, the amount will be credited to the bank account as per the details provided by investor.

Post your doubts/queries on Sovereign Gold Bonds in below comments, we would try our level best to address those.

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