Sovereign Gold Bonds Are Here, Once Again

  Author: Jai Prakash

Here’s a glittering update. The Tranche VII of the Sovereign Gold Bond will be open for subscription for investors during February 27 to March 3. If you have gold that you are not particularly attached to and lying idle, you could ensure that it earns some money through the Sovereign Gold Bonds (SGB).

Similar features as in past issuesAs in the previous tranches of SGB, this time too, the features are the same. You get a coupon rate of 2.5% per annum for an initial investment of Rs 2,943 per gram. This will be paid semi-annually to your bank account. This means that unlike investing in physical gold where you rely on capital appreciation, in case of SGB, your gold actually earns money in the interim. While the minimum investment is one gram, you can go up to 500 grams. The long holding period of 8 years ensures that you don’t suffer from any turbulence in gold prices in the interim.

After 5 years of investment, you can exit from the bonds by selling it off at an exchange.  If you sell the Sovereign Gold Bonds before eight years, you pay long term capital gains tax with indexation benefits. However, if you stay invested for the whole term, your investment is exempt from capital gains tax.

Along with gold exchange traded fund (ETF), offered by mutual funds, SGB is a useful investment that ensures that your investments get some overall growth in years when equity and debt markets don’t do so well. Of course, you need to ensure that you don’t get too excited with any gold investments. Remember the thumb rule: all alternate investments such as those in gold shouldn’t cross 10-15% of your overall investments.

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