The subscription for the Series VIII tranche of the Sovereign Gold Bonds (SGBs) scheme, the 2021-22 Series VIII, opens on Nov 29 and will close on Dec 03. The SGBs will be allotted on December 07, 2021.
Sovereign Gold Bonds (SGB) are issued by the Reserve Bank of India (RBI) at regular intervals throughout a fiscal year and give investors a unique opportunity to diversify their portfolios with a relatively stable investment compared to Equities. What’s more, SGBs can even be used as collaterals for loans!
With Sharekhan, you can now invest in SGBs 100% digitally!
What’s more, for investors making online payments and whose applications are made in digital mode, they get a Rs 50 per gram discount too!
So, what are Sovereign Gold Bonds?
SGBs are Government Securities denominated in grams of gold. These are substitutes for holding physical gold. SGBs are issued by the RBI on behalf of the Government of India in tranches throughout the fiscal year. Investors have to pay the issue price in cash and the bonds are redeemed in cash on maturity.
As you might know, there are many reasons for buying gold:
· The yellow metal acts as a hedge against inflation
· Relatively stable investment compared to Equities
· Good diversification strategy
Advantages of investing in SGBs
Let’s see why investing in SGBs could be a “golden” opportunity for you:
· Sovereign Gold Bonds carry the sovereign guarantee as these are issued by the Reserve Bank of India on behalf of the Government of India.
· These Bonds are tradeable on the Exchanges.
· With Sharekhan, you can easily purchase SGBs 100% digitally and hold the Bonds in demat form. That’s not all – if you invest in SGBs via online payments and if your application is made in digital mode, you get a Rs 50 per gram discount as well!
· Investing in SGBs eliminates the risk of theft and the cost of storage. Further, SGBs are free from issues like making charges and purity, associated with purchase of gold in jewellery form.
· SGBs carry a fixed interest rate of 2.50% per annum on the amount of the initial investment. Interest is credited semi-annually to the bank account of the investor.
· Investors are assured of the market value of gold at the time of maturity and periodical interest.
· SGBs have a tenure of eight years; early encashment/redemption of the bonds is allowed after the fifth year.
· Interest on SGBs is taxable but the Capital Gains Tax arising on redemption of the bonds is exempted for individuals.
· SGBs can be used as collateral for loans.
SGB prices are linked to the price of gold of 999 purity published by India Bullion & Jewellers Association (IBJA).
Not a Sharekhan customer?
Not a Sharekhan customer, but still want to subscribe for Sovereign Gold Bonds? Open a free* demat and trading account in just 15 minutes* with Sharekhan: https://bit.ly/SharekhanDIYin15 (* T&C apply).
Opening a demat account with Sharekhan allows you to not only engage in Intraday Trading and Derivatives, but also participate in the share market with F&O, trading in Equity market and Commodity market at competitive brokerage.
Did you know Sharekhan offers free Research podcasts? With the daily Sharekhan 3R Research Actionable Update, it is our endeavour to bring listeners simplified stock market analysis that they can easily understand and take action on to make the most of the opportunities mined by the Sharekhan Research team.