{"id":3529,"date":"2022-06-22T14:39:39","date_gmt":"2022-06-22T14:39:39","guid":{"rendered":"https:\/\/www.paytmmoney.com\/blog\/?p=3529"},"modified":"2022-06-22T14:40:23","modified_gmt":"2022-06-22T14:40:23","slug":"how-to-invest-in-sovereign-gold-bonds","status":"publish","type":"post","link":"https:\/\/www.paytmmoney.com\/blog\/how-to-invest-in-sovereign-gold-bonds\/","title":{"rendered":"How to invest in Sovereign Gold Bonds"},"content":{"rendered":"

SGBs, or Sovereign Gold Bonds, are debt securities that are issued by the Reserve Bank India (RBI) on behalf of the Government.<\/span><\/p>\n

SGBs are substitutes for holding physical gold. They are held in the demat form, and\u00a0 denominated in grams of gold. Investors receive a fixed interest of 2.5% per annum, which is paid out every six months.<\/span><\/p>\n

The minimum investment in SGBs is 1 gram, and the maximum is 4 kg for retail investors in one financial year.<\/span><\/p>\n

Since they are backed by the government, SGBs are considered safe. The return from SGBs is in terms of interest and capital appreciation. Moreover, it is over and above the gold price return.<\/span><\/p>\n

If you apply for SGBs online, you can get a discount of Rs 50 per gram on the nominal value.\u00a0<\/span><\/p>\n

Advantages of investing in SGBs<\/b><\/p>\n

Safety<\/b>: SGBs do not carry any risk associated with holding physical gold, except the market risk. The bonds do not have any hefty making or designing charges or TDS. Furthermore, no one can steal or change ownership.<\/span><\/p>\n

Additional source of income<\/b>: SGBs offer guaranteed annual interest at 2.5%. The interest payout frequency is twice a year. This can be an additional source of income. Historically, gold prices have demonstrated extensive capital appreciation.\u00a0<\/span><\/p>\n

Therefore, you can enjoy growth in their investment\u2019s real value, and they can accumulate substantial wealth over time.<\/span><\/p>\n

Indexation benefit<\/b>: In case an investor transfers their bond before maturity, then they can benefit from indexation.<\/span><\/p>\n

Trading on exchanges<\/b>: You can trade SGBs on the secondary market. For example, after holding the bond for five years, one can trade them on NSE. NSE has all the Sovereign gold bonds after listing. To view all SGBs listed on NSE, use <\/span>this link<\/span><\/a>.<\/span><\/p>\n

Can be used as collateral<\/b>: Banks accept SGBs as collateral against loans. They treat them as a gold loan after setting the loan-to-value (LTV) ratio to the value of gold. The India Bullion and Jewellers Association Limited determines the ratio.<\/span><\/p>\n

Do note that the volume of SGB is very low when you have SGB in demat format, so you will not get the best price when you wish to exit at peak gold price. Also keep in mind that SGBs cannot be converted into physical gold.<\/span><\/p>\n

How to invest in SGBs on Paytm Money?<\/b><\/p>\n

The government regularly puts out the schedule for issuance of SGB tranches. Investors can apply for SGBs via the Paytm Money app and <\/span>website<\/span><\/a>.\u00a0<\/span><\/p>\n

Here are the steps to apply for SGBs on Paytm Money:<\/span><\/p>\n