Sovereign Gold Bonds
Ramesh…SGB (Sovereign Gold Bond) is a good initiative. There are attractive advantages compared to keeping Physical Gold or Gold ETFs:
- 2.5% interest guaranteed at highest level (Govt. Of India).
- No TDS for interest (But taxable as per your incometax bracket).
- Long Term Gain tax after 3 years..No LTGT after maturity (8 years).
- No question of doubting the purity as redemption in in cash.
- Transferable.
- Liquidity (tradable on Stock Exhanges…but since the volume will be less, can’t be a major advantage, at least now)
- Can take loan.
Drawbacks:
- The very purpose of gold is not monitory, but psychological.
- We can’t show off the certificate like a new necklace 😜
Overall SGF is good way to hedge your equity investments.