The Sovereign Gold Bond, launched by the Government of India first in 2015 provides the investors an option to exit after five years, 2 to 3 years – depending upon the series- earlier than the investment comes to its term. The 2015 and 2016 series have now come up for redemption. However, as per RBI data, the investors are choosing not to exit and continue to hold. Only 2% of gold Bond in the first two series and 0.5-0.6% only for the third and fourth series came up for the exit.
It makes sense from point of view of the investor as held till maturity, this investment will escape the capital gains tax. For an investment of Rs.2600-3119 for these four series, the investors saw a return of 55-85% over five years, without taking into account 2.5% interest paid half-yearly on their investments.
Sovereign Gold Bonds are a popular investment option for big and small alike. Experts opine that one should have 10-12% of your portfolio in the yellow metal. Compared to the purchase of physical gold, the sovereign gold bond has the advantage of being immune to stealing and being paid for the investment at 2.5% half-yearly. Purchasing Gold Bond is cheap compared to ETF which charges an expense ratio of 0.5% to 0.75%. Sovereign Gold Bonds can be bought for as low a quantity as 1 gram. It is sold in all public sector bank branches and post offices across India, after the announcement of the new series and rate by the Government of India.
