How to Buy Sovereign Gold Bond Online with Zerodha– Indians are inseparable from gold, unlike people in most other nations. Incredibly, 11% of the gold in the world is held by Indians. But, we are rarely aware of the options for buying gold as ETFs or sovereign gold bonds. People always prefer to buy actual gold. Investing at least 5% of one’s portfolio in gold or securities is advised for all investors, as per experts. One can diversify his portfolio’s risk by doing this.
What is Sovereign Gold Bond
The Indian government has developed a program called Sovereign Gold Bonds to make gold investment more straightforward. To effectively replace physical gold, the Reserve Bank of India issues sovereign gold bonds. The lowest denomination that a person can invest in is 1 gram, and the greatest denomination is 4 kilograms. The annual maximum limit for trusts and other institutions is 20 kilograms. After 10 to 15 days after the first issuance, the SGBs will be made available on the stock exchange.
An individual can invest in the digital gold format through SGB without purchasing actual gold. There is a very low likelihood of any defaults because it is a security investment where the bonds are backed by the government. Purchasing SGBs is analogous to purchasing actual gold. This indicates that you will continue to earn 2.5% of the bond’s principal each year until it matures. Your bonds’ cost will be determined by the price of gold in the market at the time of redemption.
Features of Sovereign Gold Bond
Conditions for Eligibility Everyone who resides in India, including people, trusts, HUFs, non-profit organizations, and colleges, may invest in SGB. You can invest on behalf of a minor as well.
1- Bonds issuance.
SGBs are only issued by RBI on the Central Government’s behalf, and they are traded on the Stock Exchange. Multiples of one gram of gold are issued. For it, investors will get a holding certificate. It can also be changed into Demat form.
2- Documenting KYC
While purchasing digital gold, the same Know-your-customer (KYC) guidelines apply. You need to complete KYC by providing copies of your identity documentation, such as a PAN card, and your address documentation, like a passport, driving license, or voter identification card, for verification.
3- Maturity of Sovereign Gold Bonds
The sovereign gold bond matures after eight years. But, you have the option to terminate the bond after the fifth year (only on interest pay-out dates).
4- Bond Return/Interest Rate for Sovereign Gold
For SGB, the current annual interest rate on your initial investment is 2.50%. For eight years, or until maturity, it is paid twice a year (semi-annually). Your shared account, which you provided while investing, will be directly credited with interest. Returns are frequently correlated with gold’s current market price.
5- Maximum Cap on Sovereign Gold Bonds
Bond values are determined in multiples of grams of gold, with one gram serving as the base unit. One gram of gold is the required amount to start investing, and the maximum limit of gold investment in SGB is four Kg. per shareholder.
Why Sovereign Gold Bonds were needed
Due to soaring gold prices, investors are considering investing in precious metals. People also invest in electronic and paper gold because gold investing is not limited to physical gold. Nithin Kamath, the founder, and CEO of Zerodha, has an old recommendation for those investors in gold who want to diversify their portfolio beyond purchasing real gold.
In a previous tweet, the founder of Zerodha recommended against using digital gold in favor of sovereign gold bonds, gold exchange-traded funds, and gold mutual funds. According to him, an investor can save an additional 5% on gold purchasing and selling by opting for Sovereign Gold Bonds, Gold ETFs, and Gold Mutual Funds rather than Digital Gold.
Benefits of buying Sovereign GoldBond
According to Archit Gupta, founder, and CEO of Clear, Sovereign Gold Bonds are the best gold investment option out of all those available “2.5% annual interest is paid to investors by SGBs, and this interest is added to their taxable income and taxed following their income tax bracket. SGBs take eight years to reach maturity. If held until maturity, capital gains from SGBs are tax-free. After five years, investors may, however, prematurely redeem SGBs. Gains from the redemption of SGBs between five and eight years are regarded as long-term capital gains. It has a tax rate of 20.8% (including the cess) with indexation.”
How Sovereign Gold Bond can be purchased
With the same Kite account and no additional fees, Zerodha enables all of its users to purchase sovereign gold bonds. Compared to banks and post offices, investing in SGB is significantly easier and faster with Zerodha. Discover the most recent SGB Series release dates. SGBs aren’t offered for sale all year round. These bonds are offered by the Indian government in four to six series. Typically, the investing opportunities begin in May and expire the first week of September.
Visit the SGB forthcoming schedule page to learn the issue date for the remaining months of the year. The period during which investors may purchase SGB issues is listed on this page in the column labeled “Date of subscription.” The date on which the SGB units you bought will be credited to your account may be found in the column labeled “Date of Issue”.For purchasing SGB online the following steps are to be followed:
Steps to Buy Sovereign Gold Bond Online with Zerodha
- A one-time fee of Rs. 200 must be paid to start a commodity trading account. Using your Demat account, you can manage this.
- Then, log in by entering your username and password as credentials. The Zerodha kite app also allows for logins.
- Visit Zerodha’s Gold Bond page to place an SGB buy order. Visit the Coin by Zerodha page by clicking the “Invest Now” button.
- If you want, you can log in and select ETFs and SGBs from your Coin by Zerodha dashboard. Together with the Sovereign Gold Bond program, you can also invest in gold through this page. Not to fear, everyone who has a Zerodha account can utilize the Coin app.
- To access the dashboard of your Coin app, click here. As soon as you log in successfully, this link will take you directly to the SGB website.
- The Sovereign Gold Bond investment option is available and can be found on the Coin page. This option is not available if you visit this page outside of the SBG scheme offering dates.
- Put the number of SGBs you want to buy in the “Sovereign Gold Bond” area.
- On this page, you can also see the offer closing date. Until the deal closes, make sure you have enough money in your Zerodha equity account.
- Only grams can be used to specify the amount to invest. While the price of gold per gram for SGB is set by the government of India, you are not permitted to specify the amount.
- Then submit an order specifying the quantity of your purchase.
- You can confirm the investment details by clicking on a window that will display. Check the buy units, carefully read the confirmation message, and then press the place order button a second time.
- Your purchase has been made successfully.
- When an order is placed, the status of the order becomes pending.
- If you want to make any change in the quantity of your order, then click on ETFs and SGB from the account menu on your Coin by Zerodha dashboard.
- It will open on the same page as you placed your order.
- To edit your SGB order, click the pencil symbol. Click the Trash icon if you want to cancel your order.
- Your Zerodha will receive the SGB units.
- As soon as you receive the notice “the order is accepted,” your deal will be finalized.
- A broker fee of 0.01%, or Rs. 20, whichever is less, is your responsibility.
How to check the online status of Sovereign Gold Bond
After the SGB is issued, your online purchase of a sovereign gold bond via a Demat account will appear in your portfolio. If a purchase is made offline, the issuing bank, post offices, SHCIL offices, designated stock exchanges, or agents may be contacted to pick up the SGB certificate of holding. The email address provided on the application form will get a letter from the RBI including the digital copy of the holding certificate.
Download the Sovereign Gold Bond Certificate
On the date that the SGB is issued, the holding certificate will be given to the clients. It will be mailed to the registered email ID if a person has chosen to get the certificate in physical form; otherwise, it will appear in the Demat account on the date of issuance of the Sovereign Gold Bond. Now, from here, the certificate of holding can be downloaded.
I hope you like the post How to Buy Sovereign Gold Bond Online with Zerodha. If you plan to hold your investment for 8 years, sovereign bonds are the ideal choice. You can invest your money in SGB if you have long-term financial obligations to fulfill and are confident you won’t require the covered amount throughout the eight years at any point.
In a similar vein, if investing in SGB appeals to you and you don’t want to buy actual gold but would like to receive regular returns, you should do so. Despite all of that, investing a small portion of your money will, over time, protect your portfolio and diversify your assets.