Investors seeking to diversify their portfolio with gold have a golden opportunity as the Sovereign Gold Bond Scheme 2023-24 Series IV opens for subscription on February 12. Let’s delve into the details of this lucrative investment avenue and explore the benefits it offers.
Subscription Details
The Reserve Bank of India (RBI) has set the issue price for Sovereign Gold Bonds (SGBs) at Rs 6,263 per gram of gold. The public issue will remain open until February 16, providing investors with a limited window to capitalize on this offering. SGBs applied for under this series will be issued on February 21, 2024.
Understanding SGBs
Sovereign Gold Bonds are government securities denominated in grams of gold, providing investors with a convenient and secure alternative to holding physical gold. The issue price of SGBs is determined based on the average closing prices of 999 purity gold reported by the India Bullion and Jewellers Association (IBJA) during the preceding week.
Investment Benefits
Investors applying online and making payments through digital modes enjoy a discount of Rs 50 per gram less than the nominal value. SGBs offer a fixed interest rate of 2.50% per annum on the initial investment, with interest credited semi-annually to investors’ bank accounts. Furthermore, capital appreciation upon maturity enjoys tax exemption, enhancing the attractiveness of SGBs as an investment avenue.
Investment Insights
Gold has historically delivered favorable returns to investors, offering a hedge against market volatility and economic uncertainties. With gold returning 8.92%, 9.55%, and 13.54% on one-year, three-year, and five-year bases respectively, SGBs present a compelling investment opportunity for individuals willing to remain invested for the entire eight-year maturity period.
Is SGB Right for You?
Consider these factors before investing:
- Long-Term Commitment: SGBs have an eight-year maturity period, ideal for investors with a long-term horizon.
- Tax Implications: Interest income is taxable, and short-term redemptions accrue capital gains tax.
SGBs present a valuable avenue for diversifying your portfolio and hedging against inflation. With its government backing, attractive returns, and tax benefits, Series IV is a compelling proposition for both seasoned and new gold investors.
Disclaimer: (This information is provided solely for informational purposes. It is important to note that investing in the market or a business idea involves market risks. Before investing money as an investor/ owner/ partner, always consult an expert. DNP News Network Private Limited never advises to invest money on stocks or any specific business idea. We will not be liable for any financial losses.)
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