All You Need To Know About Sovereign Gold Bond: The Offer Ends Today

Here is all that you need to know about the Govt. of India designed Sovereign Gold Bond. Remember the offer ends today!

Are you a hardcore James Bond Fan?

If not then chances are that like me, your spouse will be hijacking you this weekend to watch Daniel Craig in Spectre, which will probably be his last avataar as a James Bond.

I am talking about Sovereign Gold Bonds, a Government of India designed scheme, whereby you buy gold bonds worth 2gm to 500 gm for an 8 year period.  

Tired of seeing us hoard gold jewellery coins and biscuits, in our lockers, the government now want us to buy financial assets whose price is based on gold. I know that the social conditioning in which we have been raised, gold happens to be our best financial resource for unforeseen times.  And this is probably the only investment which most of us understand.

If you invest in the new sovereign gold bond scheme, it will still serve the above purpose. Unlike the physical gold we buy and then take extra care to protect it through lockers etc, Gold Bonds will take away those worries.

So before you go for the Bond that your spouse loves, read this quick guide about the Bond that you adore..

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 What is a Sovereign Gold Bond?

It’s a financial instrument, issued by Reserve Bank of India and its price depends on gold prices. It can be bought for a fixed tenure of 8 years. The price of the first tranche of gold bonds has been fixed at Rs 2684 per gram.  The minimum quantity you buy is 2gm worth of gold bond and the maximum is 500 gm. So by paying Rs 5368 you buy 2gm worth of gold bond.

Remember, you can’t give your existing gold to buy these bonds. It can only be purchased with cash/cheque.

Why should I buy these bonds?

For the love of gold you have. Instead of buying jewellery for each new family function, invest your surplus saving in these bonds. These bonds will earn an interest of 2.75% annually on the original amount you invest. After the 8 year maturity of these bonds, you will earn the interest as well as appreciation if the gold prices are higher than what they are today when you buy them. So while the jewellery you purchase today will be subject to deduction of making charges etc if you were to sell it later, in the gold bond you earn in two ways: annual interest and price appreciation.

If these bonds get actively traded on stock exchanges, then you can sell them before the maturity period as well.

How and where do I buy these bonds from?

First approach your financial planner or discuss with your spouse as it will give you an idea of how much should you invest in these bonds.

While these bonds can be bought at designated post offices, National Saving Certificate (NSC) agents, I would suggest that you approach your bank directly to purchase them as the process will be faster if you are their customer already. The last day to subscribe to these bonds is November 20, 2015. For more details about this bond, you can visit the official government website here

The purpose of this post is to educate you about the investment vehicle and it’s not to be construed as a direct investment advice. Please consult your family financial planner/chartered accountant for a detailed advice. You can also write to us at [email protected] for a detailed financial planning.

Cover image via Shutterstock

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