Gold Bond Investors to Get 333% Returns on December 2017 Issue
In a significant development for investors, the Reserve Bank of India (RBI) has announced the final redemption price for Sovereign Gold Bonds (SGBs) issued in December 2017. As per the announcement, the final redemption price for SGBs under the 2017-18 Series-XI, which had an issue date of December 11, 2017, has been set at ₹12,801 per unit. This price is significantly higher than the issue price of ₹2,954 per unit, resulting in a staggering return of around 333% for investors who held onto their bonds until maturity.
For those unfamiliar with SGBs, they are a type of investment instrument introduced by the Government of India to allow investors to invest in gold without actually holding physical gold. SGBs are denominated in units of gold, with each unit equivalent to 1 gram of gold. The bonds have a tenure of 8 years, with an option for investors to exit after 5 years.
The significant return on investment for SGBs issued in December 2017 can be attributed to the steady increase in gold prices over the past few years. Gold prices have been on an upward trend, driven by a combination of factors including economic uncertainty, inflation concerns, and a decline in the value of the US dollar. As a result, the value of SGBs has also increased, providing investors with substantial returns.
It’s worth noting that the final redemption price of ₹12,801 per unit is also applicable for premature redemption of SGBs under the 2019-20 Series I, which had an issue date of June 11, 2019. This means that investors who had purchased SGBs in June 2019 can also redeem their bonds at the same price, although they will not be eligible for the full 333% return since they have held the bonds for a shorter period.
The announcement of the final redemption price for SGBs is a significant development for investors who have been holding onto their bonds. It provides them with an opportunity to realize substantial gains on their investment, which can be reinvested in other assets or used to meet financial goals. Additionally, the high returns on SGBs are likely to attract new investors to this investment instrument, which can provide a hedge against inflation and market volatility.
To put the returns on SGBs into perspective, a ₹1 lakh investment in SGBs issued in December 2017 would be worth around ₹3.33 lakhs today, assuming the investor held onto their bonds until maturity. This is a significant return on investment, especially considering that SGBs are a relatively low-risk investment instrument compared to other assets such as stocks or real estate.
In conclusion, the announcement of the final redemption price for SGBs issued in December 2017 is a significant development for investors. The returns on these bonds are substantial, providing investors with an opportunity to realize significant gains on their investment. As the Indian economy continues to grow and evolve, investment instruments such as SGBs are likely to play an increasingly important role in providing investors with a range of options to diversify their portfolios and achieve their financial goals.
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