First Sovereign Gold Bonds batch matures today: Here's how much returns investors can expect

In absolute terms, this translates to a return of 128.5% without factoring in the interest earned on the SGB. Calculated in terms of Compounded Annual Growth Rate (CAGR), the returns stand at 10.88%. This illustrates the substantial gains awaiting investors as the issue reaches maturity on November 30.

Let's take another example. If an investor acquired 18.67 grams of gold, amounting to ₹50,000 at ₹2,684 per gram, the investor would receive ₹1,14,562. This means an absolute return and CAGR of approximately 128.5% and 10.92%, respectively.

With an initial investment of ₹83,333, the quantity of gold acquired would have increased to 31.17 grams, leading to a maturity value of ₹1,91,142, maintaining the same absolute return and CAGR of around 128.5% and 10.92%, respectively.

A higher initial investment of ₹2 lakh would have resulted in acquiring 74.68 grams of gold, culminating in a maturity value of ₹4,59,440. Similarly, this scenario would also exhibit an absolute return and CAGR of approximately 128.5% and 10.92%, respectively.

The success of investors in this first tranche of SGB is primarily attributed to the remarkable surge in the price of gold. Notably, the initial purchase price of SGB at ₹2,684 per gram is less than half the prevailing market price, experts say.

Investors receive a one-month notice before the bond's maturity.

On the maturity date, proceeds are credited to the registered bank account.

Any changes in account details must be promptly updated with the bank/SHCIL/PO.

The unique advantages of SGBs are apparent in their ability to allow investors to capitalise on gold price fluctuations without the complexities associated with physical gold transactions. Unlike physical gold, where losses occur due to buying and selling jewellery, SGBs eliminate such losses.

"Every time an individual alters the shape of gold, there is a loss in profit of 15–25% when buying and selling jewellery. Moreover, expenses are associated with storing, insuring, and safeguarding actual gold. SGBs can be stored in the Demat account or even as physical certificates. With SGBs, the headaches of maintaining gold and losing translation are mostly avoided," said Abhijit Roy, CEO at GoldenPi.

Investors who opt for online purchases enjoy a ₹50 per gram discount, offering greater flexibility. Holding SGBs until maturity in the eighth year enables a 100% capital gains exemption for those who buy them on the secondary market.

Additionally, Roy said that selling the SGB before the eighth year entails Short-Term Capital Gains (STCG) if sold within three years and 20% Long-Term Capital Gains (LTCG) if sold between three to eight years. However, holding until maturity in the eighth year qualifies for a 100% capital gains exemption.