Comparing Gold Investment Avenues: A Comprehensive Overview

In 2015, the Government of India unveiled a groundbreaking initiative under the Gold Monetization Scheme: Sovereign Gold Bonds (SGBs). Designed to streamline the investment process in gold, these bonds offered investors an opportunity to ride the waves of gold prices without the complexities associated with physical gold transactions.

Let’s delve into the characteristics of each investment avenue to better understand their merits and demerits –

Features	Physical Gold	Digital Gold	Gold ETF	Sovereign Gold Bond (SGB)
Purity	Purity not guaranteed	Purity is not an issue	Purity is not an issue	Sovereign Guarantee
Liquidity	Highly Liquid	Instant Credit in E-Wallet	Liquidity at T+1	Liquidity at fair value is not available for t<5 years
Risk	Higher risk of theft	Safe and insured No regulator	Safe and insured	Backed by Sovereign guarantee
Carry Benefit	No carry benefits	No carry benefits	No carry benefits	Fixed interest income
Key Costs	Design/Making, Insurance/Storage & GST (3% of purchase price)	GST (3% of purchase price) & Spread (approx 6%)	Total costs of 0.5% to 1% annually inclusive of expense Ratio, Demat Account Charges & Brokerage	No visible expenses
Capital Gains Tax	If T < 3 years, taxed at marginal rate of taxation,STCG if T > 3 years, taxed at 20% post indexation, LTCG	If T < 3 years, taxed at marginal rate of taxation,STCG if T > 3 years, taxed at 20% post indexation, LTCG	If T < 3 years, taxed at marginal rate of taxation,STCG if T > 3 years, taxed at 20% post indexation, LTCG	If T < 3 years, taxed at marginal rate of taxation, STCG if T > 3 years, taxed at 20% post indexation, LTCG (No capital gain tax if SGB are redeemed on maturity or early redemption)

Above everything, keep in mind that online investors receive a ₹50 per gram discount when purchasing Sovereign Gold Bonds (SGB).

Sovereign Gold Bonds are smart investments to make. The price of SGBs is linked to gold, which means that if the gold value rises, your SGB also becomes more valuable. Sovereign Gold Bonds (SGBs) are way better than physical gold.

Hence, SGB is one of the best ways to achieve portfolio diversification with investment in gold.

How to invest in SGB?

Start investing in Sovereign Gold Bonds (SGB) today with Stocko !

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