Advantages
* Secured:
The scheme is launched by the Government of India and gold bonds will be issued
by the Reserve bank of India and will be sold through designated banks and post
offices and hence it’s much more secured.
What happened in gold scheme of NSEL is
a recent experience so this scheme is secured and will definitely give peace of
mind to investors.
* Interest
income: The investors will be paid fixed rate of interest of 2.75% p.a. payable
half yearly on the initial value of investment amount. This is another good
reason as except in gold deposit scheme you will not get any interest on gold
investment. If you are investing through Gold ETFs and Gold Funds you will also
save on fund management charges of around 0.50% to 1%. Gold investment with
assured return makes it more popular compared to other options.
The interest earned is taxable as per
individual tax slab but the capital gain will be treated as long term capital
gain with indexation benefit which will reduce your tax liability to very
nominal.
* Tracking
error: If you invest through gold ETFs or gold funds of mutual fund your
investment is likely to be affected by tracking error of the fund. You will be
surprised to know that at present one year return of this schemes ranges from
-7.20% to +2.50%. The difference is too high and this error will not be there
in gold bond as the redemption price is linked to price of 999 purity published
by IBJA.
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