Gold price record high But has reached. In such a situation, if you want to invest in gold on Dhanteras and Diwali, then apart from physical gold, you have the option of investing in Sovereign Gold Bond or Gold ETF. You can invest in both of these as per your wish. Also, let me tell you that it is safer and more beneficial than physical gold. Let us know how these two are different from gold jewelery or coins and why investing in them is beneficial.
Sovereign Gold Bond (SGB)
Sovereign Gold Bonds (SGBs) are government securities denominated in grams. These are seen as an alternative to physical gold. Investors are required to pay the issue price in cash and the bonds are redeemed in cash at maturity. The bond is issued by the Reserve Bank of India (RBI) on behalf of the Government of India. The amount of gold paid by the investor remains safe as he gets the market value at the time of premature withdrawal. These are considered superior to physical gold, as there are no storage risks and costs. You have to pay making charges when you buy gold as jewellery. There is also concern about purity.
Benefits of investing in SGB
- SGB is a safe investment option for those who are looking for a long term investment option of 5 to 8 years.
- SGBs offer interest at the rate of 2.5% which is distributed half-yearly. The final interest is paid along with the maturity amount at the end of 8 years from the date of bond issue.
- The benefits available on SGB are tax-favored. The redemption amount on the bond is exempted from capital gains tax. However, the interest earned on bonds is taxable in the hands of the investor, although no tax is deducted at source.
- Anyone can invest in SGBs such as individuals, trusts, HUFs, charitable institutions and universities.
gold etf
Gold ETF is an exchange-traded fund (ETF) that aims to track the price of physical gold. One gold ETF unit is equivalent to 1 gram of gold and is backed by pure gold. Gold ETFs are easy to sell as they are in the form of stocks. Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Limited (BSE) like any company stock. Buying gold ETF means that you are buying gold in electronic form. You can buy and sell gold ETFs just like you trade stocks.
Benefits of investing in ETFs
- The pricing of ETFs is more transparent and closer to the actual market price of gold.
- Gold ETFs are more liquid than SGBs as they can be easily bought and sold in the stock market.
- Gold ETFs are generally known as open-ended mutual fund schemes and investors can stay invested for as long as they want and benefit from returns arising from fluctuations in the price of 24 carat gold.
- Any person can invest in gold ETF through Systematic Investment Plan (SIP).
conclusion
If you are not attracted to gold jewellery, then you can invest in gold ETF or sovereign gold instead of physical gold. Along with safe investment, both of these are also beneficial. They also work to give you better returns.
