Sovereign Gold Bonds (SGBs) offer investors a secure and lucrative way to invest in gold without holding physical metal. It is crucial to remember that minors can invest in SGBs, but their guardians must submit the application on their behalf.
This enables even underage investors to start their investment journey and participate in this government-backed investment without directly handling their own accounts. These bonds are primarily issued by the on behalf of the government of India, making them completely safe and sound as an avenue for long-term wealth creation linked to gold prices.
Currently, the of 10 grams of 24K gold in Delhi has touched ₹1,11,075. This establishes the significance of gold as not only an inflation hedge but also an investment asset class.
What are Sovereign Gold Bonds (SGBs)?
are government-issued securities denominated in grams of gold. They provide a secure investment opportunity with fixed interest (usually 2.5% per annum) along with capital appreciation linked to gold prices.
Furthermore, investors save on the storage, making charges and upkeep of gold. These bonds can be later redeemed in cash upon maturity, generally after 8 years. SGBs also reduce demand and are tradable on stock exchanges.
Key eligibility and investment limits
To successfully invest on behalf of a minor, the guardian needs to provide the required application along with complete and accurate information about the minor. Furthermore, the minimum permitted investment is one gram of gold. Whereas the maximum annual limit per individual, including minors, is four kilograms.
This limitation, i.e., the ceiling, applies irrespective of whether an investor is making an individual application or a joint one. These bonds have an eight-year tenure with an opportunity to redeem after five years, providing stable investment horizons.
Five critical points for minor investors to keep in mind
- Minors are not permitted to directly apply; guardians must apply on their behalf.
- PAN card, Aadhaar Card, and KYC compliance are essential for successfully submitting an application on a minor’s behalf.
- The investment limit for minor investors falls under the same four-kilogram annual ceiling as other individual investors.
- The SGBs pay a fixed interest rate of 2.5% on an annual basis. Along with the same potential capital appreciation based on gold prices.
- These bonds can be held in dematerialised or physical certificate form. This will ensure comfort, protection from theft and security in the long run.
What are the advantages of investing in SGBs for minors?
Investing through SGBs can protect minors, create wealth and ensure peace of mind by:
- Eliminating risk of theft and purity-linked issues.
- Exemption from on redemption at maturity.
- Guaranteed annual interest and ensure a steady flow of capital.
- Transparent, trustworthy government-backed gold investment opportunity.
- Secure way for guardians to build a long-term gold portfolio for minors.
Investing in SGBs helps minors start their investment journeys before gaining financial independence.
This way, they can extract the maximum benefit of compounding wealth with gold prices and interest and cumulatively ensure that by the time they reach their twenties, they have solid wealth to back themselves and launch their careers.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult certified financial advisors and review official RBI guidelines before investing in Sovereign Gold Bonds.