The Gold Rush✨
We're about to tell something about SGB (Sovereign Gold Bonds) that no finance influencer is talking about.
SGBs are issued by RBI, and you'll buy from them if you're not street smart. Here's something - when RBI launches SGBs, they get sold out instantly. Plus, the last SGB issue of this fiscal year was only available from 6 March to 10 March 2023. So, this is already out of your league (lol)
But because you read The Cutting Chai, here's a legal way to buy them off-market.
The secondary market is actually where you wanna hang out right now
That’s right. You can visit the NSE website to buy SGBs from already existing holders.
Many investors who already own SGBs try to sell them in the secondary market for XYZ reasons to liquidate cash. And guess what, they are selling them at discounted rate. Which means, your return on gold investment is more than your mom's.😅
Typically, SGBs are sold at a price that is 3% to 7% lower than the prevailing market rate.
- This translates to an extra yield (a.k.a return) if you hold it till maturity
- Additionally, you won't have to pay taxes on the gains when you hold it till maturity of 8 years
Before you go all "Ahh! 8 years is too long". Think of the duration the jewelries stay in your house 🤷🏻♀️
Physical v/s Sovereign Gold bond comparison
Here’s a calculative comparison for you to understand why SGB from the secondary market has created a buzz.
- Physical Gold = Appreciation value - making charges 🔴
- SGB from RBI = Gold price appreciation + 2.5% returns 🟡
- SGB from secondary market = Gold price appreciation + 2.5% returns + Secondary Market Discount 🟢
"itne mei kitna milega" can be figured out by calculating the YTM (Yield to Maturity) which means how much return will you get if you kept the investment until it matured.
Our writer Vaishali has made your life easier. Here's the calculator.