The Emotions we Indians have for gold is exceptional. Gold is not just an investment for us but a sense of security also. Where some Investors love to Invest in Gold other use it as to diversify their portfolio.
There are many ways to own Gold without its inherent risks. “Sovereign Gold Bonds” are one of them.
Sovereign gold bonds commonly known as SGBs were launched in 2015 by Government of India as an Initiative to provide people with an opportunity to invest in gold instead of owning physical gold. These are the Certificates for the Gold you buy.
How to Buy Sovereign Gold Bond (SGB)?
These Gold Bonds can be bought both via offline and online modes. Most of the process is same, Such as form filling and the KYC compliance.
The major difference between the two is online is far more easier and you also get an RBI-mandated discount of RS 50 on your purchase value if you buy gold bonds online and pay online.
Where as in Offline mode you have to visit the office of the sales channel, fill out the forms, wait in long lines etc.
How to Buy Gold Bonds Online?
Now let us see how you can invest in Gold Bond via Online method. You can invest online either through listed banks or using your Demat account with your Stock broker.
Let’s understand the process for banks If you want to invest in Gold Bonds through banks, you will need to have a Net banking account. Log in to your net banking account.
During an ongoing tranche, banks display these Gold Bonds on their homepage itself So that customers can easily access them. If this is not the case with your bank website, Then click on the SGB option, generally available on the bank’s home page.
If not their then you can check the list of services they provide.
Now if you have a net banking account with your bank, we can assume that your KYC is complete.
So when you land on the registration page, you might or might not get a pre-filled form. In this form you have to fill your name, address, PAN number etc. You can also opt to fill Nominee details.
Finally, you can enter the number of units you want to purchase. You have to buy the bonds at the price set by RBI. Now because you are buying gold bonds online, you are eligible for a discount of Rs 50 per gram. So for you, the price of one unit will be (Current Price – RS 50) per unit.
Some other details
⦁ You get a fixed interest of 2.5% on SGBs. The price of one unit of the bond is fixed per tranche by RBI.
⦁ One individual can buy a maximum of 4 kg of gold via these bonds in a financial year.
⦁ A discount of RS 50 per Gram can be availed by going through the precess online.
⦁ These SGBs have a tenure of eight years with a lock-in period of five years. You will be getting cash in your accounts at maturity. You can’t ask for physical delivery.
Gold bonds are very good alternative option for those who want to invest in Gold without getting inherent risk.
These “Sovereign Gold Bonds” by Government of India provides you a fixed Interest of 2.5%. Hence SGBs are an excellent choice for Investors who want to Invest in Gold or Diversify their portfolio. But you have to be gentle and smart while investing. Refer your Financial Consultant.
Q. What is the lock in period of sovereign gold bonds?
The maturity period of the sovereign gold bond is “eight years”, which consists of a first 5 years lock in period. you can choose to exit the bond from the fifth year.
Q. Which is better physical gold or gold bond?
Sovereign Gold Bond vs Physical Gold: Sovereign Gold Bond is a far better choice for investment purpose because it gives 2.5% assured returns along with income tax exemption on one’s maturity amount. Also no inherent risk is involved such as purity issues, making charges etc.