Gold bond scheme and should you invest
If you buy gold coins and gold bars as an investment, you are wasting a golden opportunity to earn some great returns. There are gold bonds floated in the market, which allow you to capture the price movement and also pay you a fixed interest just like bank fixed deposits give. A sovereign gold bond is a simple but a superior alternative to buying physical gold. Let us explain why you should buy gold bonds.
Gold Bond Investment is denominated in grams of gold. You can get in multiples of 1 gram (gm). So, the minimum investment is 1 gram. The maximum gold you can buy through gold bonds is 4 kgs per investor per financial year. Nomination facility is available. Do remember to get the nominee details updated during investment or you can do it later as well.
How much interest rate
You will be surprised to know that a major benefit of the sovereign gold bond scheme is a fixed interest rate. The gold bond interest rate is 2.50% every year over. Remember, this is over and above the gold price return. The interest is paid every six months or semi-annually on the nominal value.
Investment certificates
Upon application for a sovereign gold bond, you will get an application number immediately. Additionally, the RBI issues certificates to all investors in gold bonds. The certificate is delivered by the bank. Remember, it usually takes 15-30 days post-application for the issue of certificates.
Gold bond advantages over physical gold
A sovereign gold bond is a better investment than physical gold because of many reasons.
Firstly, these gold bonds allow you to get a lower price than physical gold when applied online.
Secondly, you get a fixed interest rate on these gold bonds.
Thirdly, gold bonds have no holding or storage cost.
Fourth, these bonds carry a sovereign guarantee since they are issued by the government.
Fifth, another benefit of sovereign gold bond scheme is that there is no capital gains tax at maturity or redemption for individual investors. Also, there is indexation benefit if the same is transferred before maturity for non-individual investors. Do remember that the interest earned is taxable. Thankfully, there is no TDS either during redemption or interest payout.
Lastly, a sovereign gold bond is highly liquid. This is because the investment can be used as collateral for loans.
Who can buy?
All resident individuals, HUFs, registered entities like a trust, universities, charitable institutions, societies and clubs, partnership firms and private or public limited companies can buy gold bonds.
However, Non-Resident Indians (NRIs) and Foreign Institutions/Entities will not be allowed to hold gold bonds.
Final Verdict
All investors looking to buy gold should buy gold bonds. This is a great credit-risk free form of investment. There are no making charges or annual fees involved. Plus, it is taxed as physical gold and there are indexation benefits offered.
How can I invest in gold bonds in India?
Invest in digital gold Bonds with guaranteed security and safety. At Kundan Group we promise to stay with you throughout your journey, helping you grow at your own pace. You can start your digital gold investment for as low as ₹ 1. And all this with the added assurance of instant certification. All transactions & investments are tracked and looked after by our SEBI regulated independent trustee partner, IDBI.
What’s more the gold comes with a promise of 99.99 % purity procured from Kundan Refineries - A Market Leader, Miner & Manufacturer of Gold.
To top it all your digital gold investment stays safely in our secure bank grade lockers free of cost. No more stress of physical gold/silver storage or investing in expensive lockers.
So whether you are buying gold for investment or as a gift for someone you love, it all happens with just a click of a button.
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