Dhirendra Kumar explains if investing in gold is a good idea
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LEARN ABOUT: Investing During Inflation

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

Inflation has been a concern for most investors in recent years. Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. With inflation, the purchasing power of money declines; hence, investors tend to look for investments that offer a hedge against inflation. One of the possible investment options to hedge against inflation is Sovereign Gold Bonds (SGBs), which have gained much popularity in recent times.

Sovereign Gold Bonds are government securities that are issued by the Reserve Bank of India (RBI) on behalf of the Government of India. They are available for subscription to resident individuals (including minors), HUFs, trusts, universities and charitable institutions. These bonds are issued in denominations of one gram of gold, and the minimum investment is one gram. One key characteristic of these bonds is that the returns on them are linked to the prevailing market price of gold. Therefore, the returns on SGBs are correlated with the price of gold, which tends to increase during inflationary periods.

Sovereign Gold Bonds have several advantages that make them a viable option to beat inflation. Firstly, they offer an annual fixed interest rate of 2.5%, which is payable semi-annually. This interest rate provides an additional return over and above the price appreciation of gold. Secondly, there is no storage cost associated with SGBs as investors do not take physical possession of gold and the bonds are held in their demat account. Thirdly, they offer a high degree of liquidity as they can be traded on the stock exchange. Lastly, SGBs offer tax benefits to investors as capital gains tax is exempted on redemption after a minimum holding period of eight years.

Investing in SGBs can be a smart move to beat inflation as they provide an effective hedge against inflation. Historically, gold as an asset class has proved to be a reliable hedge against inflation. During inflationary periods, the price of goods and services increases, and the demand for assets such as gold increases, leading to a rise in gold prices. Therefore, investing in SGBs can provide the much-needed inflation hedging benefits.

In conclusion, inflation is a concern for investors, and it is crucial to invest in assets that provide a hedge against inflation. Sovereign Gold Bonds are an attractive investment option for investors who want to beat inflation. They offer a fixed annual interest rate, no storage cost, high liquidity, and tax benefits. Moreover, with the price of gold trending upwards during inflationary periods, investors are likely to benefit from the appreciation of gold prices. Therefore, it is recommended that investors consider investing in SGBs to beat inflation in the long run.