Have you heard about sovereign gold bonds? Have you any information on the fixed deposits? Fixed deposits and sovereign gold bonds are considered popular low-risk investment options. FDs are considered as a stable and safe investment option for investors, whereas sovereign gold bonds are an investment option that limits the import of Gold.
Both investment schemes provide many benefits that make them great investment options. This article is written on the difference between Sovereign gold bonds and fixed deposits.
Sovereign Gold Bonds
Sovereign Gold Bonds are considered the financial instrument that is issued by the RBI. They permit individuals to invest in Gold without any need to hold the physical asset. This involves less risk because it is less affected by market fluctuations.
If the investors purchase the higher denomination of bonds, they can store them in the bank and earn interest on them.
Fixed deposits
Fixed deposits are another popular investment option for those investors who prioritize low-risk investments due to guaranteed returns. Here you can deposit the lump sum amount for the fixed period with the bank.
Fixed deposits provide fixed interest rate for the tenure of your investment. The interest rate on FD is higher compared to the regular savings bank account.
SGM Vs FD
Both of the options, SGM and FD, provide good returns and have low risk. But when we compared both investment options, then there were some distinct factors also.
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Risks involved
Sovereign gold bonds act as a hedge against the inflation and erosion of the currencies. On the other hand, fixed deposits allow you to visit without worrying about external factors.
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Rate of return
Fixed deposits provide a fixed rate of return that is not affected by market fluctuations. Here you can earn guaranteed returns on the fixed rate of the interests.
In the case of the Sovereign Gold Bonds ( SGB), the returns may differ during the investment term. Here, senior citizens can get high-interest rates.
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Liquidity
Gold is in high demand among investors because of its high liquidity. There are many ways to invest your money in Gold. In the same way, sovereign gold bonds provide you with the ease of liquidity.
And in the case of fixed deposits, there is no high liquidity. It is based upon the investment terms of the scheme and deposit policies.
Conclusion
It is concluded that sovereign gold bonds and fixed deposits investment come with low risks, but they both work in different ways. Fixed deposits will give you fewer returns as compared to gold bonds.
The beneficial thing about FDs is that they keep your money safe from market fluctuations.
On the other hand, the SGB provide high returns but they are affected by market volatility. So it is upon you to decide the risk that you are willing to take.
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