Having gold in one's portfolio hedges the risk of equity investments. Historically speaking, the movement of gold prices has been inversely proportional to the movement of the markets. When the markets are in a downturn, gold is typically shining bright.
Advantages of investing in SGB vs buying real gold
- Bond Term:Sovereign Gold Bonds are issued for an 8-year term with a 2.5% guaranteed interest rate that is paid out twice a year. However, investors who are looking for early liquidation might request a premature redemption at current market values at the end of 5 years after purchase.
- Safer Investment Option: Unlike physical gold, SGBs are a safe investment choice since they are dematerialized and free of loss risks associated with dangers of safekeeping or storing gold, issues surrounding making charges for jewellery and concerns over the purity of gold that was purchased.
- Price loss risk is limited because there are no fees associated with buying gold jewellery or determining its purity, therefore SGBs can be purchased for a price that is very close to the actual market value of gold.
- Gain from Online Purchase: As mentioned earlier, investing in SGB online is more affordable because it costs ₹ 50 less per gram.