How to buy SGB at discounted price? Understand SGB naming convention | Investment Idead by APDaga

How to buy SGB at discounted price? Understand SGB naming convention | Investment Idead by APDaga
When we talk about investment, it is always suggested to diversify your investments. and In India, Gold is one of the best options to diversify your investments. 
If you want to invest in gold, 
We have already talked about the best way to invest in gold. It is SGB (Sovereign Gold Bond). If you want to know exactly is SGB the best way to invest in Gold. Click here to know why.

{tocify} $title={Table of Contents}

There are 2 ways to buy SGB:

Short Video:

1. Buy directly from RBI:

    • As you know, SGB is issued by RBI, approx. 5 times a year.

    • Just Google search SGB issue dates, you will get to know the SGB issue dates for this year.

    • Just like IPO, you get a 3-4 days window, in which you have to make an online application and you get the SGB directly into your Demat account. 

    • To make an application, google search "<Your Broker Name> SGB", you will get the link to apply for the SGB (which is being issued at that time)

      For Eg. 
      • Zerodha SGB
      • Edelweiss SGB
      • Groww SGB

    • The process to apply for SGB is similar to that of IPO and on top of that, the Chances of getting the SGB issue is more than that of any famous IPO.

2. Buy from Secondary Market:

    • Even if you miss the issue date and you still want to buy the SGB and don't want to wait till the next issue date, then no worries. you have been covered.

    • As I have mentioned in my earlier video/post, SGB can be traded on secondary markets like NSE, BSE.

    • So, you can buy SGB at the secondary market at any time.

    • To buy SGB at the secondary market, Go to your Demat account and search SGB, you will get the long list. Choose the SGB you want and buy it like any other stock.

What is the naming convention of SGB:

    • When you search SGB in your Demat account, you get the long list. many people get confused with that long list and couldn't understand what those SGB names mean.

    • First of all, you should know, SGB is an 8-year bond. that means the SGB bond will be matured after 8 years post-issue date.

    • SGB name is made up of "SGB<Month><2 digit year>" Here Month and year indicated the maturity date of that SGB bond.

      For Example, If the SGB name is SGBNOV28
      • It means this is the SGB bond that will mature on November 2028. 
      • This also means this bond is issued in November 2020 (8 years before the maturity date)

    • Once you understand the naming convention, you can choose the SGB bond you want to buy.

Which is the best way to buy SGB:

    • Out of above mentioned 2 options (ways) to buy SGB, my suggested way would be the 2nd option i.e. buy from the secondary market.

    • If you check the prices of SGB bonds on NSE/BSE, you will see, in most of the cases, you get the SGB at a cheaper price compared to the issue price by RBI of the same bond.

    • You will get around Rs.100 to 200 discount per 1 gm of gold on secondary markets.

    • also on secondary markets, you have the freedom to buy SGB at any time as per your convenience.

    • So, buying through Demat is always preferred.

    • On top of that, you should buy SGB in a SIP manner, which means buy some quantities of SGB each month or after every specific time period. That way, you will get the averaging benefit on the SGB price.

Get your concepts clear and start investing... 
If you have any doubt about investing, feel free to drop it in the comment box below. I will try my best to help you and smoothen your investment journey. 

Thank you,
Akshay P Daga

Post a Comment (0)
Previous Post Next Post