What are Sovereign Gold Bonds?
Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.
Pro Tip: Buying SGBs online and paying digitally offers a discount of ₹50 per gram over the nominal value.
Why Invest in SGBs?
- Guaranteed Returns: 2.5% fixed interest per annum on the initial investment, paid semi-annually.
- Capital Appreciation: Value is linked to the market price of gold exactly like physical gold.
- Tax Exempt: Capital gains tax is completely exempted upon maturity after 8 years.
- No Storage Costs: Held in digital/demat format, eliminating the risk of theft and locker charges.
- Collateral: Can be used as collateral for loans from banks and financial institutions.
How to Invest?
SGBs are issued in tranches by the RBI. You can invest during the active subscription window via:
- Banks & Post Offices: Visit your branch or use Net Banking to apply directly.
- Stock Brokers: Buy via Demat account platforms (Zerodha, Upstox, Groww, etc.).
- Secondary Market: You can buy existing SGBs from the stock exchange like regular shares anytime.