First tranche of sovereign gold bonds matures on November 30
What's the story
The Reserve Bank of India (RBI) has revealed the final redemption price for the first batch of Sovereign Gold Bonds (SGBs), which are set to mature on November 30.
Launched back in November 2015, this very first SGB offering drew investments totaling Rs. 245 crore.
With an annualized growth rate of 12.28% throughout their tenure, SGBs have demonstrated their value as a solid investment choice that provides a buffer against market fluctuations.
Details
Redemption price and returns of SGB 2015-I tranche
In November 2015, the first SGB tranche was issued at Rs. 2,684 per gram, and the redemption price is now fixed at Rs. 6,132.
Ajinkya Kulkarni, co-founder and CEO of Wint Wealth, as told to BusinessLine, stated, "For someone in the 30% tax bracket, the tranche has delivered 12.28% CAGR (Compound Annual Growth Rate) over eight years."
He also mentioned that post-tax returns outperform many actively managed large-cap mutual funds when assessed on a rolling returns basis.
What Next?
Benefits of investing in SGBs
Kulkarni suggests that retail investors can allocate up to 10% of their portfolio to gold through SGBs, depending on their risk tolerance and financial objectives.
SGBs provide an annual interest of 2.5%, paid semi-annually, and are more liquid than physical gold.
Investors can buy or sell them on stock exchanges, avoiding the risks and expenses tied to storing and verifying the purity of physical gold.
Insights
How has gold fared in comparison to equity markets?
Gold has given decent performance over the past few years.
As of November 24, gold's value has increased by 16.7% in one year, while the Sensex has grown by just 5.54% during the same period.
For those set on investing in gold, opting for SGBs over physical gold is a smarter choice due to their secure investment nature and higher overall returns.