Synopsis: RBI has announced a final redemption of Sovereign Gold Bonds (SGB) issued in 2017-18 Series VII, rewarding investors nearly 329% over eight years. This is one of the best performing long term investment options in recent years.
You are sitting on a jackpot today if you have invested in RBIs Sovereign Gold Bonds 8 years ago. The SGB scheme has turned out to be a remarkable wealth creator. Apart from offering regular interest, it has tracked gold’s consistent rise, the government backed gold investments truly pays off.
The RBIs Announcement
RBI has announced the final redemption price for sovereign Gold Bonds 2017-18 Series-VII which was issued on November 13, 2017. This redemption window is available to investors who have completed their full 8 year maturity period. The redemption price has been set at Rs. 12,350 per gram which is a massive leap from its original price of Rs. 2934 offline and Rs. 2884 online per gram on November 13, 2017. The principal and the final interest installment will be automatically credited to the bank account linked with the bond.
What would be the SGBs 8 year returns for 288% from 2017 – 2025 based on the RBI issue of final redemption rate for November 13, 2017 series vii Soverign gold bonds. Example for 100 grams at Rs. 2934 per gram issued on November 13, 2017 calculation:
| Particulars | Details | Amount in Rs. | Explanation |
| Issue price (2017) | 2934 per gram x 100 | 2,93,400 | Initial investment amount |
| Redemption Price (2025) | 12,350 per gram x 100 | 12,35,000 | RBI redemption price (2025) |
| Capital Gain | (1235000 – 293400) | 9,41,600 | Total capital gains without interest |
| Interest earned | (2934 x 2.5% x 8 years) | 58680 | Semi annual interest payments |
| Total proceeds (redemption + interest) | 12,35,000 + 58,680 | 12,93,680 | Total money in 2025 |
| Total profit | 12,93,680- 293400 | 10,00,280 | Overall gain in 8 years |
| Overall return (%) | (941600 / 293400) x 100 | 320.927 | Investment % grew |
| Profit over investment | (941600 +58680)/ 293400 x 100 | 340.927% | Total profit % |
| CAGR | ((12,93,680 / 293400)^ ⅛ -1) X 100 | 20.38% | CAGR for 8 years. |
You would receive 12.93 lakh approx. in 2025 if invested in 2017 with 288% gain returns as per RBI.
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Return Calculation for Online SGBs
For example – An investor who has purchased 100 grams of SGBs for Rs. 2.88 lakh in 2017 online would receive approximately Rs. 12.92 lakh including interest in 2025. No capital gains tax if redeemed after maturity.
| Particulars | Details | Amount in Rs. | Explanation |
| Issue price (2017) | 2884 per gram x 100 | 2,88,400 | Initial investment amount |
| Redemption Price (2025) | 12,350 per gram x 100 | 12,35,000 | RBI redemption price (2025) |
| Capital Gain | (1235000 – 293400) | 9,46,600 | Total capital gains without interest |
| Interest earned | (2884 x 2.5% x 8 years) | 57680 | Semi annual interest payments |
| Total proceeds (redemption + interest) | 12,35,000 + 57,680 | 12,92,680 | Total money in 2025 |
| Total profit | 12,92,680- 288400 | 10,04,280 | Overall gain in 8 years |
| Overall return (%) | (946600 / 288400) x 100 | 328.224% | Investment % grew |
| Profit over investment | (946600 +57680)/ 288400 x 100 | 348.22% | Total profit % |
| CAGR | ((12,92,680 / 288400)^ ⅛ -1) X 100 | 20.62% | CAGR for 8 years. |
Conclusion
The gold prices have hiked tremendously over the past few months, which has increased the SGBs redemption value to Rs.12,350 per gram from Rs.2961 per gram. The SGBs are the safest as they are government bonds and will also gain 2.5 extra interest semi-annually. The discipline, patience and trust in government backed assets can turn even a conservative investment into stellar success.
Written by Soumya M