Akshay Tritiya 2024: Digital gold vs SGB, which is better gold investing option?

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Akshay Tritiya 2024: Akshaya Tritiya is considered an auspicious day for buying gold. The significance of buying gold on Akshaya Tritiya varies across different regions and communities in India. Some people buy gold jewellery or coins, while others invest in gold as a way to secure their financial future.

However, it’s essential to approach gold buying with careful consideration of your financial situation and investment goals. This article explores two famous ways of buying gold sovereign gold bonds (SGB) and digital gold. Let’s understand the terms further.

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What is SGB?

The Reserve Bank of India (RBI) issues SGB on behalf of the Government of India. These bonds allow individuals to invest in gold in a paperless form without really owning physical gold. SGBs provide an alternative to buying actual gold or investing in gold exchange-traded funds.

What is digital gold?

Digital gold is an investment in which individuals buy, trade, or hold gold digitally using online platforms or mobile apps. Unlike real gold, digital gold allows investors to possess fractional amounts of gold without the requirement for storage or physical delivery.

Akshay Tritiya 2024: Digital Gold vs SGB

	SGB	digital gold
Where to buy	Exchange-traded. They can be bought/sold only during market hours.	It is not exchange-traded. It can be bought/sold anytime online.
Lock-in period	5 years	None
Cost	Transaction and Demat account opening expenses	A on-time applicable GST of 3 per cent
Minimum investment	Minimum investment of one gram	Investment amount as low as Rs 1
Storage	Physical gold is not involved	Digital gold involves buying/selling of physical gold stored in physical vaults.
Regulation	RBI-issued	Not backed by any regulatory authority
Interest	2.5% annual interest	None
Tax	Capital gains are tax-free if held until maturity	Taxable as per income tax slab rates if held less than 36 months. LTCG of 20.8% is applicable if held for more than 36 months.

Akshay Tritiya 2024: Which is the best option digital gold or SGB?

Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited (RSBL) believes SGB and digital gold both are good modes of investing in gold this Akshay Tritiya.

“Investors can opt for any of the two, depending on risk appetite and time horizon of investment. If the investment time horizon is short-term for one to three years, then one can go for Digital Gold for better liquidity. If the investment time horizon is long-term for five to eight years, then one should invest in SGB for better returns,” said Kothari.

Echoing a similar view, Naveen Mathur, Director – Commodities & Currencies, Anand Rathi Shares and Stock Brokers said both digital gold and SGB are great alternatives to purchasing actual gold.

“Whether to invest in an SGB or digital gold ultimately depends on the investor’s financial objective and preference,” said Mathur.

On the flipside, Mohit Gang, CEO, MoneyFront, reckons SGB is a superior way of investing in Gold.

Backing his claim, Gang listed the following reasons:

>>Easy to invest in.

>> Has RBI backing.

>> Can be held in dematerialised form and fetches the exact market rate of gold.

>>One doesn’t have to bother about purity, making or breaking charges, storage or handling costs, etc.

>> SGB is it fetches 2.5 per cent interest every year which is not available in any other mode of holding gold.

>>Returns earned are completely tax-free on maturity.

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