Sovereign Gold Bond

Like Gold? Too risky to store? Here’s a scheme.

Sovereign gold bond is a government security issued by the reserve bank of India as an alternative to physical gold. 

The investor buys SGB at issue price (As determined by Indian bullion  and jewelers association limited) Of 999 purity of the last three business days of the week preceding the subscription period.After maturity the investor gets the return in cash. 

The tenure for the investment is eight years. 

Premature withdrawal is allowed only after five years. 

The minimum investment is 2 gram of gold and maximum is 4kg for individuals and 20 KG for institution or corporate entity. 

The advantage of using gold bond is it reduces the burden of import of gold. 

Value of issue price retain its powers as depreciation does not affect the bond.It can be used as a collateral for a loan.

A fixed rate of interest Of 2.5% annually  is provided to the investors,which is paid twice a year.

It is beneficial for long-term investors as the capital gains is tax free if held till maturity.

For online investors Rs.50 per gram relaxation is given.

Risk factors associated with the bond is that With the rise in price of gold the demand decreases as seen recently.

But as it is issued by RBI the risk attached is less as compared to digital gold.

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