What is the Best Way to Invest in Sovereign Gold Bonds? | Motilal Oswal

Best Way to Invest in Sovereign Gold Bonds

There are various kinds of investors and individuals are always attempting to find ways of diversifying their investment portfolios. Some investors are conventional, wanting security. Others may wish to strike a balance between fairly decent returns and safety in investments. Still others may be daring enough to take their chances with stocks. For those wanting to strike a happy medium between safety and decent returns, Sovereign Gold Bonds can help in allocating wealth. 

  • What are Sovereign Gold Bonds?

Before you go ahead and invest in SGBs, you should know what they actually are. Sovereign Gold Bonds or Sovereign Gold Bonds, represent the Government of India’s Sovereign Gold Bond Scheme. Launched at the end of 2015 under the umbrella of the Gold Monetisation Scheme, SGBs are made available during specific periods of the year, in tranches, by the Reserve Bank of India. During the periods when the Reserve Bank of India makes it available for people to invest in Sovereign Gold Bonds, the announcement of Sovereign Gold Bonds is made in newspapers via press releases. However, your bank may know of the same in advance too. When you know the features of SGBs, you may view these as a good way to invest your money. You will also realise how you can invest in these. 

  • Features of Sovereign Gold Bonds

The following features and benefits of SGBs will indicate how you can invest in the same:

- Sovereign Gold Bonds are an investment scheme to invest in gold (24 carat gold) as part of a subscription. Bonds are issued in units of the value of grams. The minimal unit is worth a gram of gold. 

- An annual fixed interest rate of 2.5% is applied, and payouts of interest are made every 6 months. 

- The bonds are invested in with a fixed tenure. This is 8 years. However, investors can opt out of the scheme in the 5th year, the 6th year, or the 7th year. This may be done only on the dates of interest payouts.

- You can invest in a minimum of one gram of gold, and a maximum amount of 4 Kg of gold. 

- You can invest in Sovereign Gold Bonds in joint holdings. 

- Investors can purchase bonds through cash payments (up to a maximum value of Rs. 20,000), cheque payments or demand draft payments. 

- Investors may avail of subscription forms and apply for Sovereign Gold Bonds at designated banks and post offices in India. Branches of certain banks (like SBI) can accept subscriptions from investors. 

  • How to Invest in SGBs

You can easily invest in Sovereign Gold Bonds at any designated bank like SBI and HDFC Bank. You may apply for the same through the website of the bank in question under the ‘Investment’ tab. Each bank will have a menu-driven process, but in general, methods are the same. If you wish to physically apply, you can do so by collecting subscription forms and submitting them to designated banks with your payment. You will need your PAN/Aadhaar Cards to apply as your KYC details will be verified and you will be issued the bonds. 

Safe Investments

Sovereign Gold Bonds are considered relatively safe to invest in, and though you may not be able to do so through brokers, you can certainly open a Demat account with proficient brokers like Motilal Oswal and keep your bonds safe there. 

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