Today, GOLD Bond’s name is in trend, the form of investment. So today we will know What is Gold Bond?
There are usually two types of investments in gold. One kind of community buys gold in the form of jewelry. Who will use jewelry maybe in the future and one kind of guy, who invests in precious metal only for good returns.
But Investing in ornaments now because of any event of the future? In the future, if the price of gold increases? That question is in their mind.
It is not calculated to take Physical Gold or Ornaments as an investment. Because keeping this jewelry at home is a risk. If you keep it in the bank, you have to pay some charges to the bank also
Many times remains doubt on metal purity.
If the price of gold goes up in the future, many people are investing today in jewelry. If you want to buy gold as an investment, then Sovereign Gold Bond is a good product to get rid of all these problems. That product is issued through RBI.
Why we Should Invest in gold bonds?
•No design and making charges:
When we buy jewelry, we pay 20% to 30% of our amount in the form of designing and making changes. If in the future that gold loses its luster, it will have to polish again.
Which is a bit costly, because when you polish gold there has some gold loss. Which is considered your loss. Investing in gold bonds protects you from these two losses.
•No Storage Risk and Cost:
It’s an electronic form of gold, so there is no risk factor to stolen. no cost also, because it is stored in the bank in electronic form for that there is no maintenance cost. On another side, you can call it Digital Gold.
•No Impurities:
In this case, there is no problem with impurities. Because it’s not physical gold.
•No Default and Safety risk :
There is no risk of being defaulted and in the matter of safety In this bond. The Government of India is baking the whole process.
•NO GST or STT:
Securities transaction tax(STT) Or Goods and Service Tax (GST) is not applicable for this investment.
On the other hand, you will get 2.5% simple interest on your invested amount till maturity.
•No Capital gain Tax on maturity period:
As per Government Rules, the maturity period of this fund for 8 years. On maturity, whatever is the appreciation value of Gold, that will be completely free. No capital gains tax applies to that amount.
•Collateral for Loans:
If you need a loan for any reason. you can get it with collateral documents of this fund.
•Good Long term Returns:
If you think as a long-term investment. 8 years later means after maturity you will get capital appreciation. Because the price of Precious Yellow Metal is almost rising. With this, you will definitely get a 2.5% simple interest twice a year. This is why Gold Bond is the most appreciated object.
•Demat Form:
There is a tension of losing the certificate of general investment, but since it is kept in the dematerialized form, there is no problem with this fund.
•Tradable on Exchanges:
You can also sell this fund from the stock exchange. If you want to sell within 5 years then also you can sell it through Exchanges.
From where to Buy Gold Bond?
- Post office.
- Commercial Banks. The physical certificate is available in both the processes, which has to maintain and needs to be kept in a safe place.
- Stock Holding Corporation of India Limited. You can invest through this website also.
- Stock Brokers Through.
If there is an option, then you can buy through Broker(Zerodha), for that it is necessary to have a Demat account. The process is quite simple.
Limitation of Investment.
- The minimum investment should 1Gram.
- Maximum 4 Kg you can buy for Individual and HUF (Hindu undivided family)
- For Trust, Charitable Intuition, and University, the maximum limit is 20 kg.
- The minimum locking period is 5 years. But if you want to sell for an emergency, It can trade through exchanges.
- Capital Gain Tax is applicable if sold before 5 years.
- No SIP option is available here.
Taxability.
- When you redeem this gold at maturity after 8 years, the Capital appreciation or Capital Gain amount is completely tax-free.
- LTCG (Long term capital gain Tax) is applicable if you redeem after 5 years as per the exit option.
- If you continue investing for 8 years, you will get 2.5% interest every year. But the tax on this interest must deduct.
What is Issue Price?
Accumulate the 999 Gold Average Price in Closing 3 Working Days. The price will grant as the Issue price. As per the Government Rules.
How do get the closing price?
RBI releases notifications about the closing price on some websites.
Indian Bullion and Jewellers Association Limited – Closing prices are available on their website.
Redemption Price.
The average closing price of 999 purity for the last 3 working days.
What is a Payment Option?
Cash up to 20,000 Rs at a time.
Demand draft or Cheque through you can buy also.
But in the electronic payment process, you can get a 50 Rs discount on every transaction.
How to Minimize Risk Factor in Gold bond?
I. See the Buyer point View:
If you want to buy gold today or go to buy jewelry thinking that the price of gold will go up in the future, you have to pay both, designing and making charges.
If you want to use that jewelry after 7 to 8 years, it may not have a golden shine. So you have to polish it again, which is considered a loss. If you want to change the design trend, you have to pay new designing and making charges.
This too is costly and has the possibility for impurities. And in this case, you will not get any interest in the money you have spent.
So what should you do to avoid all this discomfort?
Sovereign Gold Bond is a very good option. Because if you buy gold of equal value for 7 to 8 years from this fund. You can earn 2.5% interest on this spent money.
Moreover, due to the fact that this gold is associated with the full market price, You get appreciation value gold. You can buy jewelry with that money.
Then, in this case, you got relief from your double-making changes and also got a simple interest in that amount for 8 years.
On the other hand, if we invest in the stock market and if the stock market is down after 8 years, it will be difficult to buy gold through selling that equity.
II. See Investor Point of view:
If you want to invest in bonds then Sovereign Gold is Bond’s Best option. At the time when you want to invest, if the price of gold fluctuates more, then you can put your expected price in every month’s in short-term FD, which is for 4 to 6 months.
You can invest in bonds at a time when you find the price of gold is comfortable.
If there are RBI issues at that time, then from the secondary market you can buy. Which is available in Zerodha.
Conclusion
Hopefully from this article, it is clear what is a gold bond? And we can look at the market situation today and say Why We Should Invest in it.
If you buy jewelry or invest in gold, if it is for some future reason, However, investing in Sovereign Gold Bond will be a smart move.
Because with this investment you can make double income. Which makes this bond very attractive.
As regulated by RBI, there is no risk factor. Today, all investors are looking for this type of investment. By the time the RBI releases the issue, if for some reason it does not come under your knowledge, you can buy it through Exchange also. So I hope now you will aware of the Gold Bond.