There are many investors who like to look for different investment avenues to diversify their portfolio, investing in gold being one such option. However, additional factors like jewellery making charges, safe storage of the precious metal might deter a few from investing in physical gold, making them look for alternative ways to invest in the valuable metal sans the additional costs.
It has led to the rise of several online instruments like Sovereign Gold Bonds (SGBs) and Gold Exchange-Traded Funds (ETFs) that act like gold but do not require the investor to store it physically. If you are looking to invest in gold bonds, the process to buy them online is time-saving and hassle-free.
What are Sovereign Gold Bonds (SGBs)?
Sovereign Gold Bonds or SGBs are RBI-issued bonds that investors can invest in. The RBI issues these for a tenure of eight years, but investors are allowed premature redemption after the fifth year. The issuing of SGBs opens from time to time and investors get a window of five days to invest in gold bonds online.
Features of Sovereign Gold Bonds
Here is what could make SGBs a better investment vehicle for you, compared to any other form of gold investment –
- SGBs bear an interest of 2.5% per annum, credited half-yearly to the investor’s account
- You can subscribe for as low as a gram of gold, and a maximum of 4 kg (for individuals/HUF) and 20 kg for corporations and trusts
- Price as well as payouts are calculated based on the last three days’ average of the price of gold (999 purity) as published by the Indian Bullion and Jewellers Association (IBJA)
How to invest in gold bonds online?
The government, along with RBI, has mandated that SGBs will be sold through the scheduled commercial banks, designated post offices, stock exchanges like Bombay Stock Exchange and National Stock Exchange, and Stock Holding Corporation of India Limited.
If you are looking for ways to buy gold bonds online, you can apply through the website of any listed bank. You need to fill the application form and complete your KYC compliance. You can do this only when the sale of these bonds is opened by the RBI, which is notified by the central bank from time to time.
While the SGBs are a good investment avenue, you should maintain a vigil on your asset allocation so that you do not end up heavily invested in a single product or asset category. Exploring your investment options through a financial advisor can help you to reach your goal of wealth creation through tailormade solutions, suitable for your risk appetite.