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Should I redeem my investment in Nippon Gold Savings Fund to invest in Sovereign Gold Bonds?

SGBs not only ride on gold prices but also return additional 2.5 per cent every year, tells Dhirendra Kumar

I had an SIP in Nippon Gold Savings Fund, which I stopped around three years ago. Will it be a prudent strategy to redeem this money and invest in Sovereign Gold Bonds (SGBs)?
- Rajeev

Yes, I think so. As I explained earlier, all the forms of gold ownership come with some expenses or transaction costs. SGBs, however, do not have anything of that sort. Further, these bonds will not only ride on gold prices but will also give you an additional 2.5 per cent interest every year. The capital gains tax on maturity is also exempt.

So, I would say if the amount accumulated in the gold fund is something sizeable and you have the patience to hold SGBs for eight years, then, by all means, change it.