Chemslife Financial Services is one of the leading and well-diversified financial services companies in India offering services across brokerage (across the asset classes of equities (cash and derivatives), commodities and currency), investment banking, wealth management, distribution of third party financial products, research, financing, depository services, insurance broking and clearing services to corporate, institutional, high net worth individuals and other retail clients.
Close
Get in touch
- 1/137, 1/136 Second Floor, Mainroad East Street, <br>Velukkudi, Thiruvarur (Dt), Tamilnadu, 610 102.
- chemslifeoffice@gmail.com
- +91 95971 79325
- Monday to Friday: 9am to 6pm
- Velukkudi, Thiruvarur (Dt), Tamilnadu, 610 102.
- Support +91 95971 79325
Sovereign Gold Bond
Chemslife Financial Services
Sovereign Gold Bond
“Always invest in gold”, our elders have taught us. It pays off well, they said, and they are right.
In India, people have traditionally invested in gold, especially since many cultures consider this yellow metal precious. So if you are planning to invest in it, “Go right ahead”, we say! In fact, why buy chunky jewellery and worry about safekeeping when you can invest in a sovereign gold bond (SGB)? It’s less risky, it’s convenient, and you don’t have to worry about storage.The sovereign gold bond scheme is a Government of India undertaking that allows you to purchase gold on paper. In simple terms, this scheme is a substitute for holding physical gold, says the Reserve Bank of India. So, you will be purchasing gold in kilograms but not holding on to the metal physically. Investors have to pay for the purchase in cash, and the bonds will be redeemed in cash upon maturity.Sovereign gold bonds have given an alternative to investors who want to invest in gold but don’t want the hassle associated with the physical gold purchase, especially the millennial investors.The government introduced gold bonds in 2015 to curb gold imports in the Indian market. Since 2015, RBI has released several tranches of gold bonds in the market.
Benefits of sovereign gold bond
So why should you buy an SGB instead of buying actual gold?
- No storage risks and costs: If you purchase gold jewellery, you end up worrying about its safekeeping. You may even have to pay for storage in a bank locker. With this type of bond, the risks and costs of storage are eliminated.
- Low risk: The RBI issues these bonds on behalf of the government. Which also means that the Central government backs the scheme. That makes these bonds safer than purchasing actual gold.
- Payment in market price: When you withdraw your bond, either upon maturity or prematurely, you get the current market price. Investors are assured of the market value of gold at the time of maturity and periodical interest, says the RBI.
- No making charges: When you buy gold jewellery, you pay making charges that you may not be able to redeem upon resale. But with SGB, you need not worry about the making charges or the purity of the gold.
- No tax on capital gains: The government of India has exempted the tax on capital gains for purchase of gold if you invest in a sovereign gold bond. Interests earned, however, will be taxable.
- Indexation Benefits: If you try to transfer (exit) the bond before maturity, you can use indexation to lower the capital gain tax burden.
- Collateral: The paper gold bonds can double as collateral. You can use sovereign gold bonds as collateral to receive loans from banks like you take out a gold loan.
OTHER WAYS TO INVEST IN GOLD
Sovereign gold bond is not the only alternative to invest in gold. Gold-backed ETFs are also great to get exposure to the yellow metal, especially if you want to add liquid assets to your portfolio. Let’s look at a comparison between investing in physical gold, gold bonds, and ETFs.
