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It is important to invest in the right place at the right time to create wealth quickly, such as stock market, bonds, fixed deposits, gold, etc. Investing in gold means buying gold at the current market price and selling it in future when the market price rises . However, if you want to buy gold nowadays, there are a few other ways besides buying the gold in physical form and keeping it in your locker. One of the other options is the Sovereign Gold Bond or SGB Scheme of the Government of India. The Reserve Bank of India (RBI) has recently issued a notification regarding the Series II of Sovereign Gold Bond or SGB Scheme, 2022-23.
Hello friends. Welcome to Earn Money Bangla. In today’s post we are going to discuss about the Sovereign Gold Bond or SGB Scheme of the Government of India, in details. Read the post completely to get a clear picture about Sovereign Gold Bond or SGB Scheme.
What is Sovereign Gold Bond Scheme?
- SGB is a bond issued by the Reserve Bank of India (RBI). It is a bond guaranteed by the Government of India. With this scheme, you can buy gold at current market price (a minimum of 1 gram has to be bought). However, after buying gold through SGB scheme, you will not receive any gold in physical form. Instead, the Reserve Bank of India (RBI) will issue a certificate against you. After maturity, on producing the certificate, you will get your money back.
Benefits of Sovereign Gold Bond (SGB Scheme Benefits of Sovereign Gold Bond or SGB Scheme)
- After a certain period of time, on producing the certificate of SGB to the Bond issuing authority, you will get your money back as per then current market price of gold. Let us understand this with an example.
- Let us assume, on 20th June, 2022, under the SGB scheme, you bought 1 gram of gold at Rs. 5,197. After a few years, the market price of gold reaches 8,000 rupees/gram. At that time, if you deposit your SGB certificate to RBI, you will get Rs 8,000 for the 1 gram of gold which means a profit of Rs 2,803 per gram of gold.
- Also, in SGB scheme you are getting simple interest at the rate of 2.5% per year on your invested money. Income tax is to be paid on this interest.
- You can also take a loan by keeping SGB certificate as moratorium.
Sovereign Gold Bond or SGB: Maturity time
- Sovereign Gold Bond or SGB matures in 8 years. However, you can get your money back any time after 5 years of subscribing, by submitting SGB certificate.
- Apart from this, you can sell this bond even before 5 years but in that case you have to sell it in the stock market.
- Even if SGB is an investment scheme of 5 years or more, there is no capital gain tax. However, if you sell SGB in the stock market before 5 years, capital gain tax will be applicable on your profit.
What is the minimum amount of money needed to apply for SGB?
- In the case of SGB, a minimum of 1 gram is to be subscribed by an investor. An investor can subscribe to a maximum of 4 kg at once. According to a recent RBI notification, the market price of 1 gram of gold in the Sovereign Gold Bond or SGB Scheme Series II of Financial Year 2022-23 (starting from 22nd August 2022) will be the market price of that day’s gold. If you apply online, you will get a discount of Rs. 50/gm.
How much return one can get from Sovereign Gold Bond or SGB?
SGB Calculator
- Let’s say, you invested Rs. 10,000 in SGB and it matures after eight years. Let us see, how much you can earn from your invested 10,000/ –
- You will get 2.5% of Simple Interest every year on your invested amount. Hence, at this rate, you will earn Rs. 2,000 as interest in eight years.
- Generally, the price of gold increases at the rate of 8-10% per year. Hence, after eight years, your invested amount of 10,000 will become 18,500 (at 8% annual growth rate) or 21,400 (at 10% annual growth rate).
- This means, your money will be doubled in eight years if you invest in Sovereign Gold Bond. Of course, this return is much higher than any FD return.
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How to invest in Sovereign Gold Bond or SGB?
- We have four options for investing in Sovereign Gold Bond or SGB.
- Sovereign Gold Bonds can be purchased from banks.
- Sovereign Gold Bonds can be purchased from the Post Office.
- You can buy Sovereign Gold Bonds from the website of Stock Holding Corporation of India.
- You can buy Sovereign Gold Bonds through any stockbroker.
How to apply for Sovereign Gold Bond (SGB)
How to apply for Sovereign Gold Bond or SGB through Bank and Post Office
- Download the SGB form by clicking here.
- Then fill in all the information and go to the nearest bank or post office and inform them that you want to apply for Sovereign Gold Bond or SGB. Then submit the application form along with your PAN card, copy of Aadhaar card and the amount of money for which you want to buy Sovereign Gold Bond or SGB. A few days later, the RBI will issue a certificate in your name. Download it from the RBI website and keep it with you.
- Kindly note, that if you have a Demat account and if you want to keep your purchased SGB in the Demat account, enter the name of your depository (NSDL or CDSL), DP ID at the specified place on the application form.
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How to apply for Sovereign Gold Bond or SGB through the Stock Holding Corporation of India website
- Click here to log on to the website of Stock Holding Corporation of India. Then fill in all the information and follow the instructions.
How to apply for Sovereign Gold Bond or SGB directly to Demat account through a stock broker
- For this, you must have a Demat account. If you do not have a Demat account, you can open your Demat account by clicking here.
- To apply for Sovereign Gold Bond or SGB through Zerodha, visit this link and follow the instructions below by clicking on the ‘Invest Now’ option.
Sovereign Gold Bond (SGB) 2022-23, Series II
- An investor can subscribe to the Sovereign Gold Bond or SGB 2022-23 Series II from 22nd August onwards. Subscriptions will be accepted up to 26th August 2022. For an individual, at least the amount equivalent to the price of 1 gram of gold is to be invested. The maximum investment, in this case, is 4 kg by an individual. Sovereign Gold Bond or SGB Scheme Series II of Financial Year 2022-23 can be subscribed at the price of Rs. 5,197/gm. Besides, if you apply online, you will get a discount of Rs.50 per kg. In this case, the issuance date of the bonds in Tranche is 30th August.
I hope you find this post useful. If you have any questions or queries about this post or regarding any financial matter, please comment or email us at our email id: – [email protected]. If you like the post, please share it with others and let others know.
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