Understanding Sovereign Gold Bonds: A Smart Investment Choice

Sovereign gold bonds (SGB) were introduced by the Government of India in 2015 under the Gold Monetization Scheme. The idea of the Gold Bonds was to enable investors to participate in the movement of gold prices without going through the hassles of buying and selling physical gold.

Sovereign gold bonds (SGB) vs Gold ETF vs Digital Gold

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)

And above all, remember online investors get a discount of ₹ 50/ gm too on purchase of 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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