What is a Sovereign Gold Bond?
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Sovereign Gold Bonds (SGB) are Government Securities issued by Reserve Bank of India (RBI) on behalf of the Government of India and are traded on stock exchanges like NSE,BSE.
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SGBs are denominated in grams of Gold and can be purchased instead of physical gold.
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Investors have to pay current market rate for Gold and can be redeemed in cash on maturity.
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Investors can buy this Bond only during the specified time periods as and when RBI declares - meaning this bond is not available thru out the year.
Benefits of Sovereign Gold Bond
SWOT Analysis of Sovereign Gold Bond
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Guaranteed by Government
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Rate of return is fixed
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No TDS on interest
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No Capital Gains Tax if held until maturity
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Investing via Online
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Can’t buy anytime
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Only specific days to Buy
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Capital Gain Risks
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Returns are not high as Mutual funds
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Used for Loan collateral
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Exit option after 5yrs
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₹50 discount per gram
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Transfer option
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Can store in Paper or DEMAT form
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Max. buy quantity is 4Kg for Individual
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Low Liquidity in Secondary markets
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Gold price falls