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Sovereign gold bonds (SGB) vs Gold ETF vs Digital Gold - Where should you invest

  • Friday, 09 December 2022
Sovereign gold bonds (SGB) vs Gold ETF vs Digital Gold - Where should you invest

Sovereign gold bonds (SGB) were introduced by the Government of India in 2015 under the Gold Monetization Scheme. The idea of the Gold Bonds was to enable investors to participate in the movement of gold prices without going through the hassles of buying and selling physical gold. 

Sovereign gold bonds (SGB) vs Gold ETF vs Digital Gold 

Features Physical Gold Digital Gold Gold ETF Sovereign Gold Bond (SGB)
Purity  Purity not guaranteed  Purity is not an issue  Purity is not an issue  Sovereign Guarantee
Liquidity  Highly Liquid  Instant Credit in
 E-Wallet
 Liquidity at T+1  Liquidity at fair value is not  available  for t<5 years
Risk  Higher risk of theft  Safe and insured
 No regulator
 Safe and insured  Backed by Sovereign guarantee
Carry Benefit  No carry benefits  No carry benefits  No carry benefits  Fixed interest income
Key Costs

 Design/Making,   Insurance/Storage

 & GST (3% of
 purchase price)

 GST (3% of purchase

 price) & Spread
 (approx 6%)

 Total costs of 0.5% to 1%

 annually inclusive of   expense Ratio,

 Demat Account Charges

 & Brokerage

 No visible expenses
Capital Gains Tax

If T < 3 years, taxed at

marginal rate of taxation,STCG

if T > 3 years, taxed at 20%

post indexation, LTCG

If T < 3 years, taxed at

marginal rate of taxation,STCG

if T > 3 years, taxed at 20%

post indexation, LTCG

If T < 3 years, taxed at

marginal rate of taxation,STCG

if T > 3 years, taxed at 20%

post indexation, LTCG

If T < 3 years, taxed at marginal

rate of taxation, STCG if T > 3 years,

taxed at 20% post indexation,

LTCG (No capital gain tax if SGB

are redeemed on maturity or early redemption)

And above all, remember online investors get a discount of ₹ 50/ gm too on purchase of SGB.

Sovereign Gold Bonds are smart investments to make. The price of SGBs is linked to gold, which means that if the gold value rises, your SGB also becomes more valuable. Sovereign Gold Bonds (SGBs) are way better than physical gold.

Hence, SGB is one of the best ways to achieve portfolio diversification with investment in gold.

How to invest in SGB?

Start investing in Sovereign Gold Bonds (SGB) today with SAS Online!  

 

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