Dhanteras Gold Rush: Is it wise to buy Sovereign Gold Bonds from secondary market? Critical points explained

financialexpress.com:

Purchasing gold on Dhanteras has evolved into a cherished tradition. For investors seeking to participate in this practice, the government’s Sovereign Gold Bonds (SGB) scheme, introduced in 2015, offers a more contemporary and convenient alternative to acquiring physical gold.

SGBs bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment. Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along with the principal.

As we gear up to celebrate Dhanteras tomorrow, Abhijit Roy, CEO, GoldenPi, an online platform for bonds, debentures and other fixed-income assets, explains important points related to SGBs for investors in an email interaction with FE Money. Read below

Many commercial banks in India offer SGBs to their customers including State Bank of India (SBI), HDFC Bank, ICICI Bank, and others. SGBs can also be acquired via specific post offices that the government has approved. The opportunity to invest in SGBs is also offered by a lot of websites and online platforms.

Also Read: Is it the right time to invest in Gold, how much and in what form – Physical, ETF, or Gold MFs?

To operate in the secondary market, investors will need to create a Demat account to subscribe to these bonds during the subscription period. SGBs are sold and bought on exchanges like the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) where one can track the bond prices and where orders can be placed through a broker. Before placing an order, it is advisable to research the prevailing market prices and conditions since rates heavily depend on market demands.

There are two important factors to take into account as an