Sovereign Gold Bonds (SGBs) and Fixed Deposits (FDs) are popular investment options in India, but they serve different purposes and suit different investor needs.
SGBs are government-backed securities linked to gold prices. They come with an 8-year tenure and pay 2.5% annual interest. Additionally, you also get to enjoy capital appreciation in gold prices. On the other hand, FDs provide non-market-linked returns and come with an easy premature withdrawal option. You can also borrow up to 90% of the deposit amount.
Are you a confused investor wondering which product suits you better? To let you make that choice, let’s first understand both these products in detail and then check out some key differences between the sovereign gold bond vs. FD.
What is Sovereign Gold Bond (SGB)?
Sovereign Gold Bonds are investment instruments issued by the Government of India through the Reserve Bank of India (RBI). Instead of buying physical gold, you buy these bonds, which are linked to the price of gold.
Each bond has a maturity period of 8 years, and you cannot sell them for the first 6 months (listing lock-in period). After 6 months, SGBs are listed on stock exchanges, and you can sell them in the secondary market. However, sometimes finding buyers is difficult due to low trading volumes.
Next, from the fifth year onwards, the government offers an “annual redemption window”. This window is opened at the end of the fifth, sixth, and seventh years. Here also, you get a chance to redeem your RBI sovereign gold bonds.
Please note that the minimum investment in the sovereign gold bond scheme is 1 gram, whereas the maximum limits are as follows (for different eligible investors):
| Eligible Investors | Limits |
|---|---|
| Individual residents of India | Can buy bonds equal to a maximum of 4 kilograms of gold in a financial year. |
| Hindu Undivided Families (HUFs) | Have a limit of 4 kilograms per year (similar to Resident Individuals) |
| Charitable trusts and foundations | Can invest up to 20 kilograms per year |
4 Major Advantages of Investing in Sovereign Gold Bond 2025
SGBs are issued by the Reserve Bank of India on behalf of the Government of India, which makes them highly secure. Unlike physical gold, there is:
- No risk of theft
- Zero storage issues
- Absence of purity concerns
As an investor, you can trust that the value of your investment is safe because it is 100% backed by the government. This makes SGBs one of the safest options to invest in gold. For more clarity, let’s check out some other advantages of investing in the sovereign gold bond scheme:
1. Fixed Annual Interest + Gold Price Appreciation
SGB holders receive a fixed annual interest of 2.5% on their initial investment amount. This interest is paid twice a year (biannually) directly into the investor’s bank account. For example,
- Let’s say you buy bonds worth ₹1,00,000.
- Now, you will receive ₹2,500 each year as interest.
- This payment is made irrespective of gold price movements.
Additionally, you are eligible for any gains if the price of gold increases.
2. Wide Eligibility for Different Types of Investors
Investment in SGBs is open to various categories of Indian residents, such as:
- Individuals
- Hindu Undivided Families (HUFs)
- Charitable institutions
- Trusts
Even minors can invest in the sovereign gold bond scheme, but the application must be made by an adult guardian on their behalf.
3. Easy Purchase Options and Online Discount
SGBs are not sold directly by the Reserve Bank of India to individuals. Instead, the RBI allows “authorised agencies” to handle the sale. These agencies act as intermediaries and allow for both online and offline purchase of bonds. Let’s see how:
| For Offline Purchase | For Online Purchase |
|---|---|
| You can buy SGBs through banks, certain post offices, and SHCIL (Stock Holding Corporation of India Ltd.). | You can apply through the websites of the listed scheduled commercial banks. |
Furthermore, when you apply for SGBs online, you get a discount of ₹50 per gram compared to the standard issue price. This discount is only available if you pay using digital methods like net banking, UPI, or debit cards.
4. Start Investing From Just 1 Gram of Gold
The minimum investment in SGBs is just 1 gram of gold. This low entry point allows investors to start small and gradually increase their investment according to their financial capacity.
What is a Fixed Deposit?
A Fixed Deposit (FD) is an investment option offered by banks and deposit-taking Non-Banking Financial Companies (NBFCs). In an FD, you deposit a specific amount of money for a fixed period of time, known as the tenure. During this tenure, your money earns interest at a pre-decided rate.
Generally, you are allowed to make an FD ranging from 7 days to 10 years. Also, you get multiple interest payout options, such as:
- Monthly
- Quarterly
- Annually
- At maturity
4 Major Benefits of Investing in a Fixed Deposit Scheme
Gold prices fluctuate according to market conditions. This fluctuation can lead to changes in the value of Sovereign Gold Bonds (SGBs). In contrast, Fixed Deposits (FDs) provide guaranteed returns. The interest rate is locked at the time of opening the FD and remains unchanged throughout the chosen tenure.
Some other advantages of investing in fixed deposits are:
1. Low Entry Point
You don’t need a large amount to start an FD. Some banks allow you to begin with as little as ₹1,000. This makes FDs accessible for all types of investors.
2. Simple Account Opening Process
If you already have a savings account with a bank, opening an FD is very easy. Alternatively, you can also open it via the GoldenPi platform within minutes without visiting any bank branch.
3. Availability of Overdraft and Premature Withdrawal
FDs allow you to borrow against your deposit in case of emergencies. Most banks let you take a loan or overdraft of up to 90% of your FD amount.
Also, if you need money early, you can break the FD before maturity (though a small penalty applies). This flexibility ensures your money is not completely locked away.
4. Anytime Investment (No Specific Window)
You can open an FD on any day, and for any amount above the bank’s minimum. There are no issuance tranches or booking windows. In contrast, SGBs are offered only in specific RBI tranches or must be bought on the exchange.
Sovereign Gold Bond vs FD – Key Differences You Must Know!
Confused between gold bond vs FD? Thinking whether to go for the stability of guaranteed returns from FDs or take advantage of increasing gold prices through SGBs? Please note that both options have their own benefits and limitations.
Check out the comparison below to better understand the key differences and decide which investment can suit your needs better:
| Aspect | Sovereign Gold Bonds (SGBs) | Fixed Deposits (FDs) |
|---|---|---|
| Risk |
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| Capital Safety |
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| Returns |
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| Tenure |
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| Loan Facility |
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| Tax Benefits |
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Preferring Stability? Invest in FDs Online via the GoldenPi Platform!
Sovereign Gold Bonds (SGBs) are government-backed securities that let you invest in gold without holding it physically. They have an 8-year tenure with an option to exit after 6 months. Also, these bonds pay a fixed interest of 2.5% per year along with gains if gold prices rise. Backed by the Government of India, they are considered highly safe.
In contrast, Fixed Deposits (FDs) provide fixed and non-market-linked returns. You can withdraw your FD before maturity (with a small penalty) or even borrow up to 90% of its value.
As an investor, if you wish to benefit from gold’s price movements, SGBs can be suitable. Whereas, if you prefer stable and guaranteed growth, FDs could be better.
Want to book FDs online? You can visit the GoldenPi platform and browse the fixed deposit schemes offered by popular banks and NBFCs. Start your FD booking process today!
Sovereign Gold Bond vs FD FAQs
1. What is the issue price of Sovereign Gold Bond 2025?
Currently, the future of SGBs is uncertain! The government of India is considering discontinuing them. Even the RBI did not announce any new SGB issue for FY 2024–25 or FY 25-26 (until August 22, 2025).
For your reference, the last issue was SGB 2023-24 Series IV, priced at ₹6,263 offline and ₹6,213 online.
2. Is joint holding allowed in sovereign gold bonds?
Yes, Sovereign Gold Bonds can be held jointly. Two or more investors can apply for and own the bonds together. However, the investment limits (such as 4 kg for individuals) are applied to the first applicant named in the application.
3. Which is safer, gold bonds vs. FDs?
Both investment instruments are considered safe, but in different ways. SGBs are backed by the Government of India, so there is no default risk. However, their value depends on gold prices, which can fluctuate.
On the other hand, FDs give fixed returns and are unaffected by market conditions. As per the current rule applicable as of August 22, 2025, deposits up to ₹5 lakh per bank are insured by DICGC.
4. At what price are the SGBs sold?
The issue price of SGBs is fixed in Indian Rupees. It is based on the simple average of the closing price of gold (of 999 purity) for the last three working days before the subscription period.
For those unaware, this closing price is published by the India Bullion and Jewellers Association (IBJA).
5. Which option gives better liquidity, the sovereign gold bond vs. FD?
FDs are more liquid because you can withdraw them anytime before maturity by paying a small penalty. You can also borrow easily against them.
In contrast, SGBs have an 8-year tenure. There is an initial listing lock-in period of 6 months. After that, you can sell your bonds in the secondary market. At the end of the fifth, sixth, and seventh years, the government also offers an early redemption option.
6. Is tax deducted at source (TDS) applicable to the sovereign gold bond scheme?
No, TDS is not deducted on Sovereign Gold Bonds. However, the investor must declare and pay taxes on the interest income or capital gains (arising only when redeemed before 8 years) as per the applicable tax rules.
Disclaimer: This information is for general information purposes only. GoldenPi makes no guarantee on the accuracy of the data provided here; the information displayed is subject to change and is provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. Investments in the securities market are subject to market risks. Read all the offer-related documents carefully before investing.
Fixed Deposit schemes are offered by the banks and NBFCs, which are regulated by the Reserve Bank of India (RBI). The Sovereign Gold Bond Scheme is offered by the Government of India through the RBI. GoldenPi Securities Private Limited is a registered debt broker and acts as a distributor and not as a manufacturer of the product.
