Sovereign Gold Bond 2023-24 Series IV | All you need to know

Sovereign Gold Bond (SGB) 2023-24 Series IV subscription opened

Sovereign Gold Bond (SGB) 2023-24 Series IV subscription opened on February 12, 2024 and will close on February 16, 2024. This is the last installment of SGB for the current financial year. The issue price of SGB for this tranche has been fixed at ₹6,263 per gram. Investors can apply for SGB in multiples of one gram.

What Is Sovereign Gold Bond (SGB)

If you are thinking of buying gold, but you have a question in your mind, where will you keep it? You can stop worrying about these things. IOU can help to invest in gold. Yes, instead of buying and storing physical gold, you invest in these bonds and take advantage of gold price fluctuations, while also getting a sure interest rate. It's like the shine of gold without the weight!

Key features of SGBs:

Imagine, you can invest in gold without actually keeping anything! This is what Sovereign Gold Bond (SGB) means. These are like special government IOUs, but instead of money, they represent a specific amount of gold measured in grams.

SGBs are government securities denominated in grams of gold

You don't hold any physical gold, but the value of your SGB goes up and down with the price of gold. SGBs are issued by the Government of India and are considered a safe investment. You buy SGB in units of grams, such as 1 gram, 10 grams, or even more. you can pay a fixed initial amount for an SGB. When you redeem it usually after 8 years, you will be able to get the current market value of that gold in cash.

They are a safe and convenient way to invest in gold.

SGBs are issued by the Government of India, It means that there is a minimum risk of financial loss. It is like the security deposit in the bank, but the difference is that it is linked with gold instead of cash. Apart from physical gold, you don't need to worry about losing it due to theft or damage. Like other types of investments, SGBs are stored virtually.

Forget about buying, storing, and insuring actual gold bars or coins. With SGB, everything is controlled electronically, making it much easier to invest and manage. You can easily buy and sell SGBs through online platforms or authorized institutions, just like other investments. Unlike physical gold, SGB lets you earn a guaranteed interest rate apart from potentially benefiting from appreciation in the price of gold. It's like getting double the benefits!

SGBs offer a fixed interest rate of 2.50% per annum.

Just Imagine that you invest in SGB, which is a special type of government savings account linked with gold. This account gives you a surety for a fixed interest rate of 2.50% per annum, it is just like a regular savings account. Even if the price of gold is not increasing, still you can earn reliable ROIs (Returns on Investment) with that fixed interest rate. It shows on the top level your potential profits if the price of gold increases over time.

The interest is paid semi-annually on the nominal value of the bond.

You buy a savings bond of ₹10,000. This ₹10,000 is called the nominal value of the bond. After your bond matures, you can earn interest on the insured amount instead of taking the entire amount outright. If someone invests in SBG then he will be able to get interested twice a year, or six months once. So, it's just like getting a little bonus on top of the value of gold twice within a year!

They can be redeemed after 5 years, but there is no exit load.

You can redeem your SGBs (Sovereign Gold Bonds) after 5 years, the best part is that there’s no penalty involved. It means that you don't need to pay any extra fees & any type of charge as well just to get your money back.

Think of it this way, suppose that you have locked some gold away in a safe for 5 years. After that period of five years, you decide that you need the money now, and that's why you open that safe where you had kept your gold and take it out.

No one can charge you a fee to use that gold. That's the same with SGBs. After 5 years, you can redeem them without any additional penalties, giving you full flexibility to use your investment when needed.

Who can invest in SGBs?

Investing in Sovereign Gold Bonds (SGBs) is open to a wide range of people, so chances are you can join the gold party too! Here's who's eligible to buy the SBGs bond.

Individuals:

Every Indian person living in India, whether one's salaried, self-employed, or associated with another occupation can invest in SBGs.

Hindu Undivided Families (HUFs):

If you belong to an HUF, you can also use your family funds to invest in these bonds.

Minors:

Nobody has an idea of the future, that's why it is most important to secure the future of your little one. You can start your investment journey. You can invest in SGBs on their behalf as well.

Organizations:

Any type of organization that is registered either has larger entities or small entities, these organizations could be considered universities, charitable institutions, and trusts. Every organization is eligible to invest in SBGs.

How to invest in SGBs?

If you are reading this blog from India & eligible to buy the bonds as well. So are you interested in SGBs? This is the easiest way to invest in gold without the physical hassle. Great choice! Now, where do you get these "golden tickets"? Don't worry; it's very easy to invest in it.

Supermarket:

You can buy these SBG bonds from the nearest bank whether it's nationalized or private. They are the most common place to invest in SGBs.

Local farmers market:

Post offices situated in your areas are the authorized sellers of SBGs. These are the convenient places which are near your house.

Online store:

If you are familiar with technologies and know about the online market like the stock exchange. Some stock exchanges are authorized to sell SGBs online through their platforms.

Direct from the source:

If you are not getting a proper response from above mention authorized bodies. You can also buy it directly from the RBI itself.

Benefits of investing in SGBs:

It can be a smart move to invest in Sovereign Gold Bonds. SBGs provide returns on both physical gold and other investment options.

SGBs offer a hedge against inflation:

When the rate of inflation increases, then the result is the value of things generally goes up & including gold as well. When the demand for gold increases, its price tends to rise as well. One who is investing in the SBGs should keep an eye on the movement of the gold price. If the rate of inflation goes up then the price of SBGs increases as well.

SGBs are exempt from capital gains tax if held till maturity:

You can suppose that if you buy an SBG today itself for ₹10,000. You hold the SBGs for multiple years. Now you have decided to sell it when the Gold Price has gone up by worth ₹15000. The extra ₹5000 you earned is considered a capital gain. 

There is another option which is you hold your bond till its maturity date. The maturity period is usually considered 8 years. That ₹5000 capital gain is completely tax-free. You can keep the full profit without the Income tax department taking a single coin. You can consider it as a reward for your patience. You waited till the end, Now you can enjoy all the profit without any tax hassle.

They are a safe and convenient way to invest in gold:

if you are looking to invest in gold and buy the gold. But then you are not taking a step with the fear of storing the safety and worrying about theft. That's the right time to choose the Sovereign Gold Bonds (SGBs). SBGs offer a safe and convenient alternative to owning physical gold.

Conclusion

If you want to invest in these bonds. These are the better option to invest in gold and avoid the hassles of physical ownership. SGBs offer a good alternative to physical gold. If you are an Indian citizen and want some gold shine in your investment portfolio. SGBs could be a great option. they're still subject to market fluctuations. Always do your research and understand the risks before investing.