Why Sovereign Gold Bonds are one of the best ways to diversify your portfolio?

Along with stocks and bonds, gold is an important asset class that plays a role in your portfolio. If you want to diversify your portfolio with gold, Sovereign Gold Bonds (SGBs) are one of the best ways to do so.

SGBs are linked to the price of gold and are issued by the Reserve Bank of India on behalf of the Government, making them safe. So, instead of buying physical gold, you can invest in these bonds.

If you are wondering what makes SGBs better compared to other forms of gold, here is a comparison table:

Now, before you decide to invest in SGBs, you need to know that they have a fixed tenure of 8 years and a lock-in period of 5 years. This means you can either do a pre-mature redemption after five years or wait till it matures and gets redeemed at the end of 8 years.

SGBs are also listed on the exchanges, just like stocks. This means you can sell it anytime on your broker app. However, the liquidity in secondary markets can be an issue.

This post is by Tharun Iyer. Tharun manages Zerodha’s Support Portal and is curious about finance.