Gold and Bonds - Investing in the Modern Era Explained
Gold is Old and New too!
India is known for its love of gold; the nation enjoys using the yellow metal in jewellery, coins, and bars. The idea of buying gold as an investment is not new. King and emperors made the decision to invest in gold long before modernization to both assist their kingdoms develop and serve as a safety deposit for times when their country could be under danger.
So, why invest in gold? Let us hear more from Aritro
Sovereign Gold Bond or SGB
SGBs are government securities issued by the Reserve Bank of India on behalf of the Indian Government. Bonds are denominated in grams of gold. Investors own the bonds which can be redeemed at the end of the bond maturity. SGB’s are generally issued for a limited window of at the beginning of a month.
Digital Gold or Digi Gold
Digital gold is a new age investment instrument which allows investors to invest in the highest quality gold which is then stored in the vaults of trusted custodians like MMTC, which is a semi-government organization specializing in refining and minting facilities.
The Name is Bonds
In the next video, let's hear from aritro about bonds as an Investment option.
Bonds are generally fixed-income, debt instruments that can be issued by the central or state governments, PSU’s, private corporates and even NBFC’s to raise money from the market, to fund projects.
Some important concepts to know and understand before investing in bonds:
Face value is the money amount the bond will be worth at maturity; it is also the reference amount the bond issuer uses when calculating interest payments
The coupon rate is the rate of interest the bond issuer will pay on the face value of the bond, expressed as a percentage
Coupon dates are the dates on which the bond issuer will make interest payments. Payments can be made in any interval, but the standard is semiannual payments.
The maturity date is the date on which the bond will mature and the bond issuer will pay the bondholder the face value of the bond.
The issue price is the price at which the bond issuer originally sells the bonds
Bond ratings determine the quality and the stability of the bond. Higher the rating, better the bond. The ratings are provided by credit rating agencies
There are different types of bonds available based on the issuer as metioned below:
Corporate bonds are issued by companies. Companies issue bonds rather than seek bank loans for debt financing in many cases because bond markets offer more favorable terms and lower interest rates
Municipal bonds are issued by states and municipalities. Some municipal bonds offer tax-free coupon income for investors
Government bonds are issued by the treasury department of the government .The entire category of bonds issued by a government treasury is often collectively referred to as "treasuries." Government bonds issued by national governments may be referred to as sovereign debt
Agency bonds are those issued by government-affiliated organizations
Hope you now have some basic knowledge about investing and various investment options available.
Moving on in the next session you will get insights on Mutual funds, various types of mutual funds and some quick tips to get started.