Sovereign Gold Bond Scheme Explained

The Sovereign Gold Bond Scheme is a government-backed investment option that allows you to buy gold without physically holding it.

The scheme was introduced in 2015 by the Government of India to reduce gold imports and encourage people to invest in a more secure and liquid form of gold ownership.

The bonds are issued by the Reserve Bank of India (RBI) on behalf of the government and are available in denominations of 5 grams, 10 grams, and 20 grams.

You can buy sovereign gold bonds through various channels, including online, through banks, or through designated post offices.

You can invest in Sovereign Gold Bonds by contacting your IDFC FIRST Bank Relationship Manager today, or purchase directly on the IDFC FIRST Bank netbanking app. The minimum investment is 1 gram, and the maximum limit is 4 kg for individuals and HUFs, and 20 kg for trusts.

Sovereign Gold Bonds are digital gold investments issued by the Reserve Bank of India on behalf of the Government of India. They have an 8-year tenure with exit options in the 5th, 6th, and 7th years.

Investors can consider investing in different tranches of SGBs whenever the government issues them. SGBs are suitable for individuals who prefer consistently accumulating physical gold through their savings.

The minimum investment is 1 gram, and the maximum limit is 4 kg for individuals and HUFs, and 20 kg for trusts. You can also buy gold bonds online, providing a convenient option for investors.

SGBs offer a guaranteed 2.5% annual return, distributed every six months acting as a fixed income investment. This return is attractive, especially when compared to the returns on physical gold.

Investors can buy Sovereign Gold Bonds from primary market during the window when government announces the dates or from secondary market from secondary market through the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

You can also buy Sovereign Gold Bonds from authorised banks, designated post offices, and brokers. The digital route is encouraged with the additional INR 50 discount per gram.

Investors have bought Rs 27,031 crore worth of Sovereign Gold Bonds last fiscal, an amount more than four times invested in 2022-23. This shows the popularity of SGBs among investors.

The tenure of gold bonds is 8 years, as per the RBI's announcement for Sovereign Gold Bonds (SGB) Series X of SGB 2017-18.

Premature redemption of SGBs is permitted only after the fifth year from the date of issue.

You can expect to earn interest on your investment, as SGBs pay fixed-rate interest on the investment amount, typically on a semi-annual basis.

The interest rate is not explicitly mentioned, but the second tranche of the Sovereign Gold Bond will offer 13.44% returns at the current gold price, according to ET Wealth Online's calculation.

The Sovereign Gold Bond has a tenure of 8 years, and premature redemption is permitted after the fifth year from the date of issue.

You can withdraw your SGB 2017-18 XIII at a price 118.14% higher than its issue price, with a return of Rs 3,386 if you withdraw on December 26, 2023.

The due date for premature withdrawal of SGB 2017-18 XIII is December 26, 2023.

You can redeem your SGB 2016-17 Series II on September 30, 2024, as it was initially issued on September 30, 2016, and has an 8-year tenure.

The final redemption date for SGB 2016-17 Series III is November 16, 2024, eight years after its issuance.

Premature redemption in the SGB scheme is permitted after the completion of the fifth year from the date of issue, as seen in the case of SGB 2017-18 XIII and SGB 2017-18 Series X.

The ultimate redemption date for SGB 2016-17 Series III will be November 16, 2024, as it was issued eight years prior to this date.

Sovereign gold bonds offer several benefits, including diversification, storing of value, and hedging against inflation.

The fixed annual return of 2.5% is disbursed every six months, adding an extra layer of profitability.

Investors can consider investing in different tranches of SGBs whenever the government issues them, making it a suitable option for consistently accumulating physical gold through savings.

SGBs provide tax benefits on capital gains if held until maturity, and are exempt from capital gains tax when redeemed or sold.

Here are some benefits of investing in SGBs:

Investors holding SGBs issued earlier can redeem them prematurely in May with potentially attractive returns due to rising gold prices.

SGBs come with a fixed annual return of 2.5%, which is a significant advantage over physical gold.

This interest is disbursed every six months, adding an extra layer of profitability to your investment.

Annual returns from SGBs can be substantial, especially when combined with the potential appreciation of gold's price.

The interest payments are based on the initial gold bond investment, and they get credited directly to your bank account.

This means you'll receive a steady stream of returns without having to lift a finger, making it a hassle-free investment option.

The fixed return of 2.5% can significantly enhance your overall earnings, making SGBs a compelling choice for investors.

Sovereign Gold Bonds (SGBs) offer a fixed annual return of 2.5%, which is a significant advantage over other forms of gold investments. This interest is disbursed every six months, adding an extra layer of profitability to your investment.

Unlike physical gold, SGBs provide a fixed return, which is a major benefit for investors. The interest payments are based on the initial gold bond investment and get credited directly to your bank account.

The annual return of 2.5% is a guaranteed return, which is a big plus for SGBs. This fixed return enhances your overall earnings, making it an attractive option for investors.

Here's a comparison of the annual returns of SGBs with other forms of gold investments:

As you can see, SGBs offer a fixed annual return, which is a significant advantage over other forms of gold investments. This return is guaranteed, making it an attractive option for investors.

You can buy Sovereign Gold Bonds (SGBs) from the primary market during the announced window or from the secondary market through the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

To invest online, individual customers can follow the steps outlined by the government, which include buying gold bonds through authorised banks, designated post offices, and brokers.

You can also buy gold bonds online, providing a convenient option for investors, and even get an additional INR 50 discount per gram for using the digital route.

The receiving officer will handle your application according to the SGB procedure guidelines, and you can obtain a certificate of holding if your application is accepted.

You can buy stocks through various channels, including the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

To start, you'll need to create a trading account with a recognized stockbroker. This is the first step in buying stocks, and it's essential to choose a reliable broker.

The NSE and BSE are the primary exchanges where you can buy and sell stocks. These exchanges provide a platform for buying and selling securities.

You can buy stocks directly from the primary market during the designated window, or you can buy them from the secondary market through the NSE or BSE.

It's worth noting that buying stocks involves some risks, but with proper research and a well-thought-out strategy, you can make informed investment decisions.

You can buy Sovereign Gold Bonds from the stock market during a specific window announced by the government or through the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

The stock market is a viable option for buying SGBs, especially when the government announces a reduction in customs duty on gold, causing prices to crash.

SGBs are trading at a 7-8% premium on the NSE due to anticipation of fear of more SGB tranches not being announced by the government.

You can invest online by following the steps provided by the government or through the stock exchanges.

The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are the platforms where you can buy SGBs from the secondary market.

To buy Sovereign Gold Bonds, you can start by contacting your IDFC FIRST Bank Relationship Manager or purchasing directly on the IDFC FIRST Bank netbanking app.

You can also buy gold bonds online, which is a convenient option for investors. The digital route is encouraged with an additional INR 50 discount per gram.

To invest online, individual customers can follow these steps: Invest in SGBs by contacting your IDFC FIRST Bank Relationship Manager todayPurchase directly on the IDFC FIRST Bank netbanking app

The minimum investment is typically one gram of gold, and the maximum investment is usually 4 kilograms for individuals and 20 kilograms for trusts and similar entities per fiscal year.

You can invest in SGBs through a range of channels, including authorised banks, designated post offices, and brokers. The price of SGB is based on the simple average of the closing gold price of 999 purity of the previous three business days from the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA).

The subscription for SGB will be open as per the following calendar. The rate of SGB will be declared by RBI before every new tranche by issuing a Press Release.

Here's a summary of the steps to buy Sovereign Gold Bonds: