Does it make sense to buy sovereign gold bond?

(Gold bonds have tenure of 8 years and can be redeemed after a period of 5 years). SGBs offer a more efficient, lucrative and economical mode of holding gold compared to physical gold. Not only are SGBs a productive asset earning interest, but they have the additional benefit of a sovereign guarantee.

Can I lose money in sovereign gold bond?

There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

What are the advantages of investing in sovereign gold bonds?

Advantages 1 Interest payment One of the biggest Sovereign Gold Bond scheme benefits is the interest payment. The government offers a fixed annual interest rate on your SGB investment. 2 Paper and Demat Format To eliminate the cost and concern of storing physical gold, the SGB is available in paper and demat format. 3 Tax Benefit

What is Sovereign Gold Bond (SGB) scheme?

Gold has always been one of the most reliable and popular investment options in India. But to limit the import of this precious metal, the Government of India launched the Sovereign Gold Bond (SGB) scheme in 2015. Since then, it has continued to launch different tranches of this scheme at regular intervals.

Is it safe to invest in gold bonds?

In terms of credit risk, these bonds are 100 percent safe as they come with a sovereign guarantee. However, since the bond price is linked to the prices of gold, if the prices of gold dropped, the value of your investment will fall. This would be the case even if you owned physical gold.

What is the difference between physical gold investment and Gold Bond?

The physical gold investment gives us gains out of the price rise. No price rise, no profit. But the gold bond is the only method of gold investment which offers you assured interest along with the price rise benefit. Interest rate is 2.5\% p.a. payable semi-annually.