Sovereign Gold Bond (SGB) 2015-I Matures

The inaugural Sovereign Gold Bond (SGB) issued on November 30, 2015, is approaching its maturity date on November 30, 2023. Investors in this historic first tranche are set to reap substantial returns as the eight-year term concludes.
The Reserve Bank of India (RBI) has disclosed the final redemption price for the SGB 2015-I tranche, set to mature at the end of this month. Each SGB unit will be redeemed at Rs6132, determined by the simple average of the closing gold prices during the week of November 20–24, 2023.
Investors who ventured into the first SGB tranche stand to gain significantly, given the remarkable surge in gold prices over the past eight years. The initial purchase price was Rs2,684 per gram of gold, less than half of the prevailing price. The fixed interest rate offered was 2.75% per annum on the initial investment amount.
For a clearer understanding of potential returns, consider an investor who acquired 35 grams of gold during the initial SGB offering at an investment of Rs 93,940. With the redemption price at Rs 6,132 per gram, the investor is poised to receive Rs 2,14,620. In absolute terms, this represents a return of 128.5%, and in Compounded Annual Growth Rate (CAGR) terms, the returns stand at 10.88%.
The RBI announces SGB tranches every financial year, allowing investors to subscribe to a maximum of 4kg per individual annually, with a minimum investment of 1 gram. Investors specify their desired investment amount in the application, and the quantity of gold is determined by the RBI's indicated issuance price, with any balance refunded to the investor's bank account.
As the first SGB tranche reaches maturity, it serves as a testament to the potential gains of investing in gold through government-backed instruments. The forthcoming redemption underscores the enduring allure of gold as a sound investment choice.



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Changes in Our Business Model
25th Sept 2020
Greetings from Moneylife Advisory Services
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • We will have to suspend the restructuring tool.
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
Debashis Basu