Gold vs Grey Hair: Are sovereign gold bonds a wise investment choice for senior citizens?

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sovereign gold bonds (SGBs), considered suitable for risk-averse senior citizens who prioritize assured regular income and minimal capital risk. The past eight years have proven to be notably favourable for SGBs, showcasing their capacity for providing both consistent income and capital appreciation. Let’s delve into a detailed examination of their performance: Average annual return: Over the past eight years, SGBs have yielded an average annual return of approximately 13.7%.

This comprises the assured 2.5% interest income along with capital appreciation linked to fluctuations in gold prices. Capital appreciation: The value of gold has demonstrated an upward trajectory in recent years, significantly contributing to the capital appreciation of SGBs. For example, the initial issuance of SGBs in 2015 has witnessed a substantial absolute price increase of around 128.5% by November 2023.

Comparison with alternative options: While lacking the flamboyance of certain equity investments, SGBs have surpassed the performance of bank fixed deposits and presented relatively steady returns amidst market volatility. This makes them an especially appealing choice for risk-averse senior citizens in search of dependable income and enduring value. The decision for senior citizens to invest in SGBs hinges on their unique circumstances and risk tolerance.

Past performance does not guarantee future outcomes. The volatility of gold prices and market conditions introduces the possibility of fluctuations. Additionally, taxation considerations come into play.