Investment is a big decision. It should be done considering an individual’s financial goals in life. No matter whether the financial goal is short-term or long-term, the investments made early can help gain relatively more benefits. Bonds are classified into different types based on the various features they carry. Let us here learn about Sovereign Gold Bond and their advantages to investors.
WHAT IS A SOVEREIGN GOLD BOND (SGB)?
If you are also looking for the answer to your question – What is a sovereign gold bond? read through to understand it better. Sovereign Gold Bond are government securities. It is denominated in grams of gold. SGB is the best substitute for physical gold. It is issued by RBI on behalf of the Government of India (GOI).
The minimum investment you can do is the gram. There is a limit to the maximum investment you can do in Sovereign Gold Bond. 4 Kg is the maximum gold an investor can buy in a financial year. Sovereign Gold Bond today has become one of the reliable sources of a safe investment.
WHY INVEST IN SOVEREIGN GOLD BONDS?
Investment in Sovereign Gold Bonds can bring to you many advantages. The choice of investing lies in your personal choice. Experts recommend portfolio diversification. Investing in a sovereign gold bond scheme can help an investor reap the fruit of investment in a mixed asset.
It can bring to you the following benefits:
Sovereign Gold Bond is one of the safest investment instruments suitable for investors concerned about capital protection. It is issued under the Government Security Act 2006 and has zero default risk. The government backing minimizes the investment risk in Sovereign Gold Bonds. Rushes to invest in sovereign gold bonds today.
The interest payment is a key attraction in the case of Sovereign Gold Bond. Investors get a fixed interest rate as an income against the investment made. Irrespective of gold prices whether rising or falling, you get the agreed interest every six months.
Unlike physical gold, Sovereign Gold Bond does not require storage space and risk of being stolen. The availability of SGB in the paper, Demat format overcomes the problem of storage and avoids any fee payable in the case of gold stored in bank lockers.
The benefit of Tax Saving
Investors holding Sovereign Gold Bond do not need to pay TDS on the interest income. The capital gains tax also will be exempted in case you redeem the Sovereign Gold Bonds after maturity.
Peace of Mind
Unlike physical gold, you don’t have to worry about purity. Also, there is no deduction called making charges in Sovereign Gold Bond because it provides the certificate to investors as proof of investment. Invest in a sovereign gold bond to enjoy peace of mind.
Investors can also take the advantage of buying Sovereign Gold Bonds at a lower price compared to physical gold when applied online. Also, you can take the advantage of traceability and transferability.
The above-detailed advantage of Sovereign Gold Bonds (SBG) can help you make an informed decision. If you wish to invest in sovereign gold bonds learn about it from the experts at Bondsindia.com and other trusted bond trading service providers in India.