If you are making plans to purchase gold coins or gold bars as an investment, make a smart choice with Gold Bonds Gold Bonds will allow you to capture the main price movement in Gold plus pay a fixed interest, much like bank fixed deposits. Learning more about the gold bond is mandatory & must to make the best of Gold investments. Moreover, a sovereign gold bond is a simple but one major alternative to buying physical gold. So, lets understand more about Gold Bonds & why are these bonds the most popular forms of Gold Investing.
Understand More About Gold Bonds:
The Sovereign gold bond are denominated in grams of gold. You get to purchase in multiples of one gram. So, the minimal investment is 1 gram. The maximum gold that you plan to buy through a gold bonds is 4 kgs per investor for every financial year.
Sovereign Gold Bond vs. Physical Gold
In India, gold in its physical form is the most favorable form of investment. The primary reason is that it is a tangible asset. Physical gold can be purchased in the form of gold coins, gold biscuits, gold jewelry, etc. However, buying and storing physical gold is a risky business. Also, the resale value of gold jewelry is significantly lower than other forms of gold. Above all, the purity of physical gold purchased can be a big concern as well.
Sovereign Gold Bonds, on the other hand, are government securities issued by the RBI (Reserve Bank of India). They are issued in the multiples of 1 gram of gold, and traded on exchange. Similar to physical gold, SGBs can be used as collateral for taking loans. The primary reason why people are leaning towards SGBs over physical gold is that the risk of theft is low with Sovereign Gold Bonds. Also, the prices of SGBs are linked to the price of gold with 999 purity mark (24 carat) published by the IBJA (India Bullion and Jewellers Association). This means that for SGB buyers, purity is not a concern.
Checking On The Interest Rates:
It is going to be a surprise for you to know that the main benefit associated with a sovereign gold bond-based scheme is associated with its fixed rate of interest. The interest rates of the Gold Bond will be around 2.50% every year. Make sure that this is over and above the returns on Gold. The interest is to be paid within every 6 months or semi-annually on the given nominal value.
Tenure Of Investment To Make:
The tenure of gold bonds is 8 years. You can use the exit option after the initial 5 years’ time is over. In case you are planning to exit before maturity, you might have to go for early redemption on interest payment dates.
On the other hand, the gold bond investors will have the opportunity to sell bonds anytime they want on the stock exchange.
Checking On With the Investment Certificates:
After applying for the sovereign gold bond, the investor will receive one application number almost immediately. At the same time, the RBI issues a certificate to the investor related to gold bonds. It is up to the bank to deliver the certificates to given investors, it will take around 15 to 30 days’ post-application to receive the certificate or obtained directly from RBI on email, if email address is provided in the application form.
Learning about the sovereign gold bond in detail and covering all the major points is really important if you want to earn the best from Gold investments.
Here’s your opportunity to buy Sovereign Gold Bonds now through ICICIdirect.com. Open an account now and buy SGBs through Stock exchanges or primary Issues.
