Sovereign Gold Bonds- Gold has always been a top choice for Indian investors, associated with long-term wealth creation and good returns. And investing in gold through the Sovereign Gold Bonds Scheme increases profits even further. Recently, the Reserve Bank of India (RBI) announced premature redemption for Sovereign Gold Bonds 2019-20 Series IV. Investors who redeem these bonds now will receive a return of approximately 183%.
When was SGB issued?
The SGB currently undergoing premature redemption was launched in September 2019. Its subscription window was open from September 9 to 13, 2019, and it was issued on September 17, 2019, at an issue price of Rs 3,890 per gram.
The total term of a Sovereign Gold Bond is 8 years, but investors have the opportunity to exit prematurely after 5 years, or through premature redemption. This redemption is possible on the same dates when interest is paid on the bond. Following this rule, the premature redemption date for this Series IV bond was set at September 17, 2025.
How is the redemption price decided?
The redemption price of SGBs is based on the latest gold price. The average closing price of the previous three trading days (September 12, 15, and 16, 2025) is taken. Based on this, investors will receive a redemption price of Rs 11,003 per unit. That means, if someone had bought one unit of SGB in 2019 for Rs 3,890, then on premature redemption in 2025, he will get Rs 11,003.
Calculation of returns
Now, how did the 183% return on SGBs come to fruition? The calculation is as follows:
Initial investment: Rs 3,890
Redemption Price: Rs 11,003
Price difference: Rs 7,113
The calculation will be like this: (7113 ÷ 3890) × 100 = 183%
This return reflects only the price appreciation and does not include interest earned by investors.
Another attractive aspect of Sovereign Gold Bonds is a fixed interest rate of 2.5% per annum. This interest is credited to the investor’s bank account every six months. This means that in addition to the redemption price, investors will also receive continuous interest over these six years. Overall, SGBs have proven to be a icing on the cake for investors.
Why SGB is better than physical gold?
Apart from returns, investing in SGB is more beneficial than physical gold for many other reasons.
There is no worry about keeping the gold safe in this.
Unlike jewellery, there is no hassle of making charges and checking purity.
Along with the benefit of rising gold prices, interest is also earned.