sovereign gold bonds, gold made rich, 13.7% return with interest, know the whole process of investing in gold bonds – sovereign gold bonds: returned an average 13.7% over last 8 years, know how to invest in gold
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Early investments gave the highest returns. For example, investors subscribed to the first eight-year issue of SGBs in November 2015 at ₹2,684 per gram of gold. Currently, the price of gold is ₹6,017 per gram. The term of that installment of SGB will be completed in November this year, then investors will get their money back based on the price of gold. Meanwhile it has given a return of around 125% till date. One SGB is equal to one gram of gold and is capped at four kilograms in a financial year.
Many affluent investors have put money in SGBs because of the tax benefits as compared to gold funds or ETFs. Anoop Bhaiya, MD, Money Honey Financial Services, says, “Capital gains on maturity after eight years are tax-free.” In addition, the government pays 2.5% interest on the value of the bond, while not paying any expense ratio. Also there is no issue of purity etc. of gold and there is also facility of withdrawal through listing and buyback. The gains from other gold instruments are taxed according to one’s tax slab, which can be as high as 30% for the wealthy.
How to shop?
Investors can buy SGB through a public issue announced by the government. Apart from this, you can also buy SGB listed in the stock market. Here some people are trading it at less than the current price of gold. However, the scope of this option is negligible. In the last financial year, the government had brought four issues of SGB, whereas this year so far no announcement has been made regarding this.
How will be the future trend regarding gold
Investors are buying gold amidst the uncertain environment spread across the world. Due to the continuous increase in the rates in America, the fear of recession has started deepening there. Gazal Jain, fund manager, Quantum Mutual Fund, says, “The rate hike by the Fed is expected to stop in the near future. This will support gold prices. In order to support economic growth and calm the nervousness seen in the financial market, the interest rate can also be possibly cut. This step will accelerate the prices of gold. Jain recommends buying gold in a staggered manner to average out the cost of purchase, and always keep at least 10-15% of your investment portfolio in gold.
- Investors have earned 4.48-51.89% annually in any of the 63 issues of sovereign gold bonds
- Interest of 2.5% per annum is also available for continuing the bond.
- 66 installments of SGB have been released
- Started in 2015
- how much change in gold price
- 14% in one year
- 12.89% in five years
- 6.87% in 10 years
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