Rs 1 lakh SGB investment turns into Rs 4.44 lakh: 344% return on 2019-20 Series III; check premature redemption details
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SGB 2019-20 Series III premature redemption
The Reserve Bank of India (RBI) has announced the premature redemption price for Sovereign Gold Bond SGB 2019-20 Series III - Issue date August 14, 2019. According to a statement from the Central Bank, investors will have the option to redeem this SGB tranche prematurely from August 14, 2026.
The premature redemption of the SGB series will be permitted after the fifth year from the date of the issue of such gold bonds on the date on which interest is payable, as per the RBI statement.
The premature redemption of the SGB series will be permitted after the fifth year from the date of the issue of such gold bonds on the date on which interest is payable, as per the RBI statement.
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How is the SGB redemption price calculated?
The SGB redemption value is calculated based on the simple average closing price of the gold of 999 purity published by the India Bullion and Jewellers Association (IBJA) for the preceding three working days, as per the rule.
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What is the premature redemption price for SGB 2019-20 Series III?
The premature redemption price due on August 14, 2026, has been fixed at Rs 15,310 per unit of SGB, based on the simple average of the closing price of gold for the last three business days, i.e., August 11, August 12 and August 13, 2026.
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How much return has SGB 2019-20 Series III generated on premature redemption?
The SGB 2019-20 Series III was issued at Rs 3,449 per gram for online bonds. It will yield an absolute simple return of nearly 344% on the date of premature redemption.
The absolute return comes to be Rs 15,310 -Rs 3,449 = Rs Rs 11,861 (without factoring in the interest). In percentage terms, it is (Rs 11,861 ÷ 3,449 × 100) = 343.87%
The absolute return comes to be Rs 15,310 -Rs 3,449 = Rs Rs 11,861 (without factoring in the interest). In percentage terms, it is (Rs 11,861 ÷ 3,449 × 100) = 343.87%
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What would be the worth of a Rs 1 lakh investment in this SGB today?
A nearly 344% absolute return means that an investment of Rs 1 lakh in this SGB series at the time of its issuance in 2019 would be worth approximately Rs 4.44 lakh today, excluding the interest earned on the SGB.
For investors who bought SGBs of the same series offline, the issue price was Rs 3,499 per gram of gold. A Rs 50 discount was available on the online purchase of the SGBs.
For investors who bought SGBs of the same series offline, the issue price was Rs 3,499 per gram of gold. A Rs 50 discount was available on the online purchase of the SGBs.
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What is a Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by the RBI on behalf of the Government of India.