Sovereign Gold Bonds - Way to Invest in Gold

SOVEREIGN GOLD BONDS

Reserve Bank of India has launched fifth tranche of Sovereign Gold Bond. Issue is open now and will close on 9th September 2016. At InvestmentMitra we always advise our clients to include gold in their portfolio. World over Gold is regarded store of value and is an accepted currency across nations. It is also regarded as good hedge against inflation. Such qualities of gold make it imperative to have in one’s portfolio.

Key Features of the Issue:

a.      Earn Interest: 2.75% assured interest per annum on the initial investment

b.     Interest will be credited semi-annually to the investor and the last interest will be payable on maturity along with the principal

c.      Minimum investment: 1 gram. Maximum investment: 500 grams

d.     Available in DEMAT and paper form

e.     Safest: Zero risk of handling physical gold

f.       Sovereign Guarantee: Both on redemption amount and on the interest

g.      Tax Benefits: No TDS applicable on interest. Indexation benefit if bond is transferred before maturity.

h.     Capital gain tax exempt on redemption

i.        Easy Exit Option: The tenor of the bond is for 8 years with an option to redeem from 5th year onwards on the date on which interest is payable

j.       Traded on Exchange: Tranche I,II, III and IV are available for trading on NSE.

k.      Ease of Borrowing Loan: Can be used as collateral for loans in times of need.

We at InvestmentMitra advise that an investor must invest between 5-15% of her corpus into gold. And there is no better form to hold gold than these sovereign gold bonds (SGB). Sovereign Gold Bonds score high over other forms of investment in Gold. Few unique advantage of investing in these bonds when compared to investing in physical gold or Gold ETFs are as below:

1. Returns - Higher, because of interest component and no management fee to be paid to manage fund.
2. Safety - Very high, as they can be held in electronic form or paper form and enjoy sovereign guarantee.
3. Purity - As they are held in electronic form.
4. Capital Gains Tax - No Capital gain tax if held till maturity.
5. Collateral against Loan - Should you need money time, you can pledge them and take loan.
6. Tradability / Exit Route - Tradable on NSE & BSE. Redemption- 5th year onwards with GoI
7. Storage Cost - Only demat account charges if held in electronic form

Overall it makes real good sense to take exposure into gold and buy Sovereign Gold Bonds. Should you have any query regarding this or wish to invest, write to us at [email protected] or send an SMS/whatsapp to Naveen @9254673750 or Ajay@9958447700.

Happy Investing!