Gold Investment Online

  • Posted By :
  • Tuesday Nov 20, 2018

Compare Physical Gold vs SGB

Indians and gold have a special bond that has only grown stronger over the centuries. In addition to ornamental – gold jewellery and scientific value, it is a great investment asset too. Having gold in your portfolio is a very sensible strategy because it is considered a good hedge against inflation. It also performs well when the market is in volatility. But when you invest in gold, should you choose physical gold or Sovereign Gold Bonds? 

Let’s compare the two options on certain important factors at and find out which is a better investment option for you.

Investment flexibility

When it comes to physical gold, people generally have to purchase 10 grams or higher. This is because it is neither practical nor easy to buy and maintain gold in smaller quantities. However, in the case of Sovereign Gold Bonds (SGB ), you can buy as little as one gm of gold online. This is a much more affordable way to invest in gold on a regular basis. Online gold investments through SGB allow you to accumulate gold in your account over time and take advantage of Rupee Cost Averaging.

Interest earning capability

In addition to the capital gains you make on SGB, you also receive a steady interest on the invested amount at the rate of 2.5% per annum. This feature is not available when you buy physical gold. So if you are investing in gold for the long run, the interest earnings on your gold investments can grow into a large amount over time.

Safety factor

When you buy physical gold, you are always exposed to the threat of loss or theft. So whether you buy a locker to store gold at your home or purchase a safety deposit box at your local bank, you need to spend an additional amount to ensure its safety. But when you invest through SGB online with, you face no such issues. Sovereign Gold Bonds are kept in a dematerialised form in your demat account at zero holding cost. As a result, they are stored easily and there is no issue of loss or theft.

Tax benefits

The tax rules for holding physical gold and SGBs are somewhat similar for the most part. If you sell your gold investment before three years, a Short Term Capital Gains (STCG) tax is applicable based on your income-tax slab rate. But if you hold your gold investment for a period higher than three years, it becomes eligible for Long Term Capital Gains (LTCG) tax of 20%. However, there is a critical benefit for SGB. In case you hold your investment up to the maturity period of eight years, LTCG on your investment is tax-free.

There is a certain allure and beauty associated with gold, it is yellow, shiny and looks terrific when converted into beautiful jewelry. No wonder, gold is much more popular than most metals. So, if you are planning to buy gold as jewelry, go ahead and purchase physical gold. But when it comes to gold investment schemes, Sovereign Gold Bonds is a better option. Make a smart move and invest through to satisfy all your investment needs.

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