Quote:Bank FD is the most stable and safest investment instrument available to investors with a minimum investment of just Rs 1000 offering fixed interest from 5 to 8% depending on tenure and institution. Interest earned on a Fixed Deposit is subject to tax. PPF is a relatively long-term investment product with maturity after 15 years with interest rates between 7-8% and a minimum investment of Rs 500. Investments in PPF and their interest are tax-exempt.
While SGB is also a long-term investment product with maturity after 8 years with a sovereign guarantee and provides an interest rate of 2.5% over and above price appreciation from gold prices with a minimum investment of around 1 gm gold, which is around Rs 6200. Gold has been giving around a 12% CAGR return for the last 20–25 years. SGB was introduced in 2015 and two tranches of SGB which have matured recently, have given returns of more than 15% per annum. Also, capital gains from SGB are exempt from tax, while the interest component is only taxed.
While SGB is also a long-term investment product with maturity after 8 years with a sovereign guarantee and provides an interest rate of 2.5% over and above price appreciation from gold prices with a minimum investment of around 1 gm gold, which is around Rs 6200. Gold has been giving around a 12% CAGR return for the last 20–25 years. SGB was introduced in 2015 and two tranches of SGB which have matured recently, have given returns of more than 15% per annum. Also, capital gains from SGB are exempt from tax, while the interest component is only taxed.
Therefore, SGB has become increasingly popular in the past few months as it is risk-free, tax-free, comes with an additional interest rate of 2.5%, without any storage cost, and makes cost with better returns than PPF and bank FD.