Gold price hits all-time high But it has arrived. In such a situation, if you want to invest in gold on Dhanteras and Diwali, apart from physical gold, you have the option of investing in sovereign gold bonds or gold ETFs. You can invest in both 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 jewelry or coins and why it is beneficial to invest in them.
Sovereign Gold Bond (SGB)
Sovereign gold bonds (SGB) are government securities denominated in grams. These are considered an alternative to physical gold. Investors must pay the issue price in cash and the bonds are redeemed for 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 risks or storage costs. You have to pay fees when you buy gold as jewelry. There is also concern about purity.
Benefits of investing in SGB
- SGB is a safe investment option for those looking for a long-term investment option of 5 to 8 years.
- SGBs offer an interest rate of 2.5% that is distributed semi-annually. The final interest is paid along with the maturity amount at the end of 8 years from the date of issue of the bond.
- The benefits available at SGB have tax advantages. The redemption amount of the bond is exempt from capital gains tax. However, the interest earned on the bonds is taxable in the hands of the investor, although no tax is deducted at source.
- Anyone can invest in SGB, including individuals, trusts, HUFs, charities and universities.
gold etf fund
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 since they are in the form of stocks. Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and the Bombay Stock Exchange Limited (BSE) like any share of a company. Buying gold ETFs means you are buying gold in electronic form. You can buy and sell gold ETFs the same way you trade stocks.
Benefits of investing in ETFs
- The price of ETFs is more transparent and closer to the real gold market price.
- Gold ETFs are more liquid than SGBs as they can be easily bought and sold on 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 karat gold.
- Anyone can invest in gold ETFs through Systematic Investment Plan (SIP).
conclusion
If you are not attracted to gold jewelry, you can invest in gold ETFs or sovereign gold instead of physical gold. Apart from a safe investment, both things are also beneficial. They also work to give you better returns.
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