The Soveriegn Gold Bonds (SGB) scheme, which is run by the Regulatory Authority on behalf of the government, has been around for seven years and seven months.
It was introduced as an alternative to buying physical gold in 2015. There has been an average subscription of 1.72 tonnes. In June 2023, people bought gold at a price of ₹5,926 per gramme, which is the highest price since the beginning of SGBs. This is almost 10% more than the December 2022 series, which had a price of ₹5,409 per gramme. Remember, the SGB prices don't include the 3% goods and services tax (GST) on gold.
The stock market's benchmark index, called Nifty, has gained 6% from January to June in 2023, reaching 19,189.5 points. However, in 2022, gold performed better than stocks and became the top financial asset class with a return of 13%, from an issue price of ₹4,791 per gram in December 2021 to ₹5,409 in December 2022. In comparison, Nifty only returned 4.3% last year, reaching 18,105 points.
SGBs and gold mutual funds both have pros and cons. SGBs offer interest and tax-free capital gains after eight years, but have limitations such as no redemption before the fifth year. Gold mutual funds have professional management and a diverse portfolio, making them great for investors with little knowledge of the markets.
Deciding whether or not to invest in a SGB this Diwali, depends on your investment goals, risk tolerance, and financial circumstances. Here are some factors to consider:
It's advisable to consult with a financial advisor to determine if purchasing SGBs aligns with your financial goals and risk tolerance. Additionally, consider your overall investment strategy and how gold fits into your portfolio before making a decision.
Investing in a Sovereign Gold Bond (SGB) can be a good option for those who want to invest in gold without physically owning it. The SGB scheme has been around for several years and has had a good subscription rate. The interest rate and tax benefits make it an attractive investment option. However, it is important to consider your investment goals, risk tolerance, and financial situation before deciding between SGBs and other gold investment options, such as gold mutual funds or ETFs. It is advisable to consult with a financial advisor before making any investment decisions.
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Sovereign Gold Bonds (SGBs) offer a fixed interest rate of 2.5% per year and tax-free capital gains after eight years, making them a viable option for investing in gold without physically owning it. However, before choosing between SGBs and other gold investment options like gold mutual funds or ETFs, it is important to consider your investment goals, risk tolerance, and financial situation. Consulting a financial advisor is recommended before making any investment decisions.
Sovereign Gold Bonds (SGBs) provide a fixed interest rate of 2.5% per year and tax-free capital gains after eight years. When the SGBs mature after 8 years, the interest and redemption proceeds will be deposited into your bank account.
FDs offer less returns than SGBs, but are safer. Choose based on your financial goals and risk tolerance.
