Should i invest in gold sovereigns

It is a safe hedge against inflation, which makes it worth investing in. Gold has delivered The current SIP book accounts for about 1. Witnessing the tremendous growth of the industry, experts expect the Mutual Fund industry to double in the coming two years.

Investment amount The initial investment cost to buy even a small quantity of physical gold is evidently high. Unlike the initial investment in gold, mutual funds have a low initial investment rate. The initial investment in physical gold can go up to multiples of , while the same can go up to Rs in mutual funds via SIP.

On the other hand, investing in SGBs instead of physical gold can be much more profitable as it is denominated in grams, so the minimum investment can be 1 gram. Usually, the making charges of gold jewelry are charged at a flat rate per gram say Rs , or as a percentage of the cost of gold jewelry.

On the flip side, Mutual Funds went through a lot of regulatory changes in According to Sebi, the body that regulates mutual fund charges, assets above Rs 50, crore will be able to charge 1. The body also blocked the mutual funds industry from doling out upfront commissions to distributors. Risk Physical gold has its perks and can be a potential long-term investment.

Thus, it carries a certain amount of risk like storage problems, making charges, theft, etc. Mutual funds, on the other hand, do not guarantee fixed returns therefore, an investor should always be prepared for any eventuality like depreciation in the value of their funds. Thus, mutual funds involve the risks of price fluctuations. Refund Gold as well as Mutual Funds are considered almost high on liquidity.

Still gold wins over the mutual funds as you can sell gold and get cash immediately. On the other hand, mutual fund redemption is a way to make a graceful exit. The redemption price of these bonds will also be computed in the same manner as issue price. No physical delivery of gold is given at the time of redemption. Investors of SGGB get annual interest 2. How the interest and capital gains are taxed on SGB The interest on SGB is fully taxable in the hands of investors but profits earned on redemption are fully exempt from capital gains tax.

Please note that the exemption from capital gains is only available for the bonds redeemed with RBI and not on the profits earned on sale through stock exchanges. In respect of SGB sold through stock exchanges, you can have the benefits of indexation for computing long-term capital gains if held for more than 36 months.

Profits on bonds sold through stock exchanges before 36 months are treated as short term and taxed at the slab rate applicable to you.

Should you invest in SGB? In India gold is gifted on all conceivable social occasions, specially at the time of marriage of sons and daughters. So, one should keep on investing in gold so as to be able to accumulate enough gold readily available at the time of marriage in the family. Since the investment in gold through SGB earns you interest as well as the capital gains at redemption are tax-free, you should invest in these bonds to guard you against any inflation and for diversification of your portfolio.

The author is a tax and investment expert, and can be reached at jainbalwant gmail. Like us on Facebook and follow us on Twitter. Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates. Why should you invest in Sovereign Gold Bonds?

To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice.

Popular Courses. Part Of. Introduction to Gold. Investing in Gold. Trading Gold. Gold and Retirement. Commodities Gold. Table of Contents Expand.

Gold as an Investment. Bullion or Bars. Gold Stocks and ETFs. The Bottom Line. Key Takeaways Investing in gold can be a nice addition to a portfolio, including accumulating gold coins, bullion, and jewelry. In some places, vending machines are even available to dispense gold in return for cash.

You can also get indirect access to gold investments via gold mining stocks or mutual funds and ETFs that track the price of gold. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.

We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts.

The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Partner Links.

Related Terms What Are Krugerrands? Krugerrands are South African gold coins that were minted in and remain popular among gold investors today.