SGB vs Gold ETF

Investors often compare Sovereign Gold Bonds (SGB) with Gold ETFs to decide the best way to invest in gold. This page explains the key differences to help you choose the right option.

You can calculate expected returns using our SGB Calculator.

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What is Sovereign Gold Bond (SGB)?

Sovereign Gold Bonds are government-backed securities linked to the price of gold. In addition to gold price appreciation, SGBs offer fixed annual interest.

What is Gold ETF?

A Gold ETF is an exchange-traded fund that tracks the price of gold and trades on stock exchanges like shares.

SGB vs Gold ETF – Key Differences

Factor	SGB	Gold ETF
Interest	2.5% per annum	No interest
Returns	Gold price + interest	Gold price only
Tax on Maturity	Capital gains tax-free	Taxable
Liquidity	Limited (lock-in)	High
Tenure	8 years	No fixed tenure

Which Is Better: SGB or Gold ETF?

SGB is better for long-term investors due to interest income and tax benefits. Gold ETFs are more suitable for short-term trading and liquidity.

Tax Comparison

Capital gains on SGB redemption at maturity are tax-free, while Gold ETF gains are taxed as per capital gains rules.

Frequently Asked Questions

Is SGB safer than Gold ETF?

Yes, SGBs are backed by the Government of India, making them highly secure.

Can I sell SGB like a Gold ETF?

SGBs can be traded on exchanges but may have lower liquidity compared to Gold ETFs.

Which gives higher returns?

SGB generally gives higher returns due to fixed interest in addition to gold price appreciation.

Also Read :
SGB Return Calculator
SGB Interest Calculation
SGB Redemption Value
SGB vs Gold ETF