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Ventura Wealth Clients
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Aurum potestas est (Gold is power). While this phrase has Latin origins, the concept & importance of investing in gold is well ingrained across India. Over the years and even through trying times such as the COVID pandemic, gold has sustained its repute as a bankable investment option. Similarly, another interesting avenue for gold investment is Sovereign Gold Bonds (SGBs). Not sure what they are? Just read on to find out.

Sovereign Gold Bonds are securities that are issued by the Reserve Bank of India in 24 Carat gold grams instead of plain cash value. When investing in them, you stand to gain from value appreciation as well as earn interest (similar to other government securities).

I.e. In case you invest ₹60,000 in SGBs today at a price of ₹6,000/gram (10gm) and wish to redeem it after 6 years when the prevalent price for gold has risen to ₹10,000/gram you stand to gain ₹40,000 at redemption!

Further advantages of Sovereign Gold Bonds include:

  • Guarantee of safety & purity of gold due to being government-backed securities
  • SGBs are listed instruments that are easily tradable at the exchanges
  • No risk of allocating for safe storage of gold, as your investment is held in demat form
  • Regular biannual interest on your investment at 2.5% per year
  • Capital Gains Tax exemption if held until maturity (8 years)

Over the years SGBs have cropped up as a promising investment opportunity, given the tendency of gold to offer inflation-beating returns. The only counterpoint that may even be considered for SGBs is that they must be invested in for 8 years to be exempted from Capital Gains Tax.

Here’s how Sovereign Gold Bonds are taxedTaxation, Sovereign Gold Bonds

Owing to these tax benefits SGBs may be an even more attractive offering for gold investment vis-a-vis Gold ETFs which incur a tax liability as per your Income Tax slab, irrespective of their holding tenure.

How to Invest in Sovereign Gold Bonds

Investment in fresh SGB issues can be made as & when investment tranches open up. The RBI plans out and issues regular tranches for investment, for which the dates and the prices are announced on its website.

The price of each tranche depends upon the prevailing market rate of gold. For instance, the RBI has presently opened up a tranche for investment in Sovereign Gold Bonds from the 19th to the 23rd of June 2023. In this tranche, you can opt for denominations starting from a single gram up to 4Kgs of gold per individual/HUF & 20Kgs per trust/similar entity.

The price set for this tranche is ₹5926/gram for offline bids & ₹5876/gram for online bids

If you are an existing Ventura customer, you can invest in Sovereign Gold Bonds instantly, without any paperwork by clicking here. Alternatively, you may also reach out to us at bondsonline@ventura1.com or +91 22 66227331 (between 10 am & 6 am) to invest.

Conclusion

Gold is a pivotal aspect of portfolio diversification and like any other investment instrument must be prudently invested in. However, banking upon its general trend the yellow metal is likely to provide a safe avenue for capital appreciation & Sovereign Gold Bonds might make it an even more attractive option for long-term investors.

 

Disclaimer:

The blog is for information purposes only and anything mentioned herein shouldn’t be construed as a fundamental reason to buy/hold/sell any stock. Furthermore, the information provided in the blog and observations made there shouldn’t be treated as the extension of recommendations made on the other properties of Ventura Securities. If you follow any research recommendations made by our fundamental or technical experts, you should also read associated risk factors and disclaimers.

We strongly suggest you consult your financial advisor before taking any decision pertaining to your finances.

We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to the blog article hereby solemnly declare & disclose that:

We do not have any financial interest of any nature in the company. We do not individually or collectively hold 1% or more of the securities of the company. We do not have any other material conflict of interest in the company. We do not act as a market maker in the securities of the company. We do not have any directorships or other material relationships with the company.

We do not have any personal interests in the securities of the company. We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships. We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.

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