Sovereign Gold Bond 2017-18 Series III Delivers Golden Returns: Investors Celebrate 33.8% Profit!

Investors in the Sovereign Gold Bond (SGB) 2017-18 Series III are uncorking the champagne today, as their investments mature with a stunning 33.8 percent return. This remarkable performance underscores the appeal of SGBs as a robust, tax-efficient alternative to physical gold, offering both capital appreciation and periodic interest payouts.

The SGB 2017-18 Series III, originally issued at an alluring price of Rs 2,901 per gram back in January 2018, reached its redemption milestone today, January 23, 2024.

The Reserve Bank of India (RBI) set the redemption price at a handsome Rs 4,374 per gram, based on the simple average of the closing gold price of 999 purity for the last three business days of the week preceding the redemption date, as published by the India Bullion and Jewellers Association Ltd (IBJA).

Let's crunch the numbers: From an issue price of Rs 2,901 to a redemption price of Rs 4,374, investors have witnessed an impressive capital appreciation of Rs 1,473 per gram.

This translates to a non-annualized return of exactly 50.77 percent over the six-year holding period. When annualized, this equates to a robust return of approximately 7.07 percent per annum.

However, the true magic of SGBs often lies in their tax advantages. While the capital gains from the redemption of SGBs are exempt from tax for individual investors, the interest earned is taxable.

This particular series also paid a fixed interest of 2.50 percent per annum on the initial investment, credited semi-annually. Over the six years, investors would have received Rs 145 per gram in interest (Rs 2,901 x 2.50% x 6 years). When this interest is factored in, the total return on the investment surges to a fantastic 33.8 percent.

Sovereign Gold Bonds have consistently proven to be a savvy investment choice for those looking to tap into gold's potential without the hassles of physical possession.

They eliminate concerns about purity, storage costs, and security, all while offering market-linked returns and significant tax benefits upon maturity. This latest redemption is a shining example of the long-term wealth creation potential that SGBs offer, solidifying their position as a cornerstone of smart personal finance portfolios.