It is not surprising why many people regard gold as the best hedge against inflation. The shine of gold never fails to lure people. Whether you buy gold for portfolio diversification or simply because you cannot resist its allure, having some amount of gold has always its benefits.
Thinking of investments, gold has always outperformed the inflation rate when kept for many years. Considering how the tumultuous movement of the stock market can cause your portfolio to be at risk like in the current situation, investing some money in gold can cut down the risk by a huge margin. You can choose to buy physical gold or invest in gold mutual funds, park some money in gold exchange-traded funds or opt for the easiest way by buying sovereign gold bonds (SGBs).
How to invest in SGBs online?
One way of buying gold bonds is by applying for SGBs when the Reserve Bank of India (RBI) announces the issue of the SGB scheme. The RBI fixes the issue price for the SGB Scheme at a particular rate for every gram of gold. The tenure of the bond is for eight years though investors can exit in the fifth year from the date of investment subject to the announcement by the RBI.
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Buying SGBs online through banks
The investors can also pay for the SGBs online by paying for the bond using the Net Banking option. Online investors avail of the bond at a discounted price of ₹50 per gram on the purchase value. These online investments can be done through listed banks of which 12 are public sector banks, 22 are private sector banks and 44 international banks.
- You must have a valid net banking account. So, log in to your net banking account.
- Click on the SGB option available on the banks’ “Home” page or listed under the “Services Tab”.
- Post clicking on the SGB option, you will find yourself on the registration page Log In with your net banking details.
- Once you are on the SGB registration page, you may get a pre-filled form though the same depends on which bank account you have logged in to.
- If the form is not filled in with your details, please fill in with your details including the name, address, guardian’s name (in case of a minor), PAN number and name of the nominee details.
- Enter the number of units you want to buy. However, the minimum permissible investment is one gram of gold while you (an individual or Hindu Undivided Family) cannot pay for more than four kilograms of gold. Trusts and similar entities can however buy up to 20 kgs of gold.
- Once you have submitted the eligibility criteria, produced a valid identification document and remitted the application money on time, you will be allotted the SGB as per the order you have placed.
Buying SGBs online through Demat accounts
Another way of buying SGBs is when they are listed and traded in the cash segment of the Bombay Stock Exchange and National Stock Exchange. These bonds can also be paid for online through the Stock Holding Corporation of India Limited (SHCIL) and other authorized brokers.
Investors can buy and sell them using their Demat accounts. The bonds available on the exchanges are those that were issued earlier and are now available in the secondary markets. One of the main reasons for people buying SGBs using their Demat accounts is because these bonds are available in the exchanges than the reference gold price. Since SGBs also contain the buy-back option after the fifth year, those available on the exchanges have different maturity dates that can then be bought depending on your investment horizon and financial goals.
To buy SGBs through the SHCIL and other authorized brokers, you can buy the SGBs from the web by filling up the online form with your Demat accounts. Once paid for, the SGB units will get credited to your Demat account. You can either trade these bonds or exit from them before maturity once they are listed.