Sovereign Gold Bond
Whenever there is an atmosphere of tension in the world. Incidents that damage the global economy start happening nearby. Generally, there is a rise in gold prices every now and then. On the contrary, amid stability in tension, a period of recession in gold also begins. Although gold is considered a safe investment, which is correct to a large extent. But do you know what. There are ways to invest in gold other than physical gold and ETFs. Yes, that is what we call Sovereign Gold Bond. In this you have to deal only on paper and earn profits. Let us understand in detail what Sovereign Gold Bond is. How to invest in it and most importantly how to make profit here.
Sovereign Gold Bond issued by the government is an investment option whose objective is to give investors a safer and better option to buy gold. These bonds are issued by the Government on behalf of the Reserve Bank of India. By investing in this, you do not need to buy physical gold and still get the full benefit of rising gold prices. Along with this, the government also gives additional interest in it.
Sovereign gold bond is a type of government security bond whose value is based on the price of gold. Investors invest in it with cash and on maturity they get the money back according to the price of gold at that time. The tenure of the bond is 8 years, while exit option is also available after 5 years. This means investors can exit this scheme even before 8 years.
There are mainly two ways of earning in gold bonds, firstly, there is benefit from increase in the price of gold and secondly, there is benefit from higher interest. Investors earn money by increasing the price of gold. Because the value of the bond is linked to the gold rate, the investor gets higher returns when the gold rate increases. Apart from this, there is also earning from interest. The government gives a fixed interest rate of 2.5% every year, which is transferred to your account on half yearly basis. This benefit is not available in physical gold and gold ETFs. Apart from this, there is also relief from capital gains tax on SGB. If you hold it for 8 years then there is no tax on the profit received on maturity.
The investment process is quite easy. Investors can buy these bonds through banks, post offices, stock exchanges (NSE/BSE), or online net banking. Additional discounts are also available on purchasing online. SGBs are generally issued in tranches decided by the RBI, information about which is given by the government from time to time.
