What Are The Key Features That Make The Gold Bond Scheme Attractive? - Loan Trivia


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Monday 19 February 2024

What Are The Key Features That Make The Gold Bond Scheme Attractive?

The government-launched Gold Bond Scheme presents a compelling investment opportunity, particularly for the rural audience seeking to diversify their portfolios. Here are the key features that contribute to its attractiveness:

1. Interest rates

The scheme offers competitive interest rates, with the government providing around 2.50% per annum for an 8-year tenure. For a 4-year holding period, the interest rate is 2.00% per annum.

2. Investment in non-physical forms

The Gold Bond Scheme eliminates the need of physical purchase of gold, offering a paper investment alternative. This is advantageous for individuals in rural areas, addressing security and storage concerns. Bonds are easily accessible through banks, post offices, and authorised dealers.

3. Minimum investment

With a minimum investment requirement of just 1 gram of gold, the scheme is highly affordable. This low entry point makes it accessible to a broad range of investors, including those in rural areas.

4. No capital gains tax

Investors enjoy a significant benefit as the scheme is exempt from capital gains tax. This implies that the interest earned from the bonds remains untaxed, enhancing the overall returns for investors.

5. Secure investment

The scheme is backed by the Government of India and issued by the Reserve Bank of India (RBI). This backing ensures a secure investment avenue for individuals. Furthermore, the bonds are tradable on exchanges, providing liquidity and flexibility for investors who may need to sell their investments before maturity.

The gold bond scheme emerges as an appealing investment option for the rural population. Its affordability, exemption from capital gains tax, and government backing make it an attractive alternative to physical gold investments, particularly addressing the unique challenges faced by individuals in rural areas.

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