RBI Bonds 2023 vs Tax Saving Fixed Deposits vs Sovereign Gold Bonds
RBI Bonds vs FD vs SGB – Which is Better for Investment in 2023?
Tax Saving Bank Fixed Deposits (FD) are the traditional investment vehicle for most Indian households.
According to a recent RBI report, approximately 50% of household financial assets in India are in FDs.
Let’s come to the point. If you are planning to invest this year, and are looking for no-risk avenues, then RBI Bonds and fixed deposits are good options to consider.
In addition, you can also consider Sovereign Gold Bond. However, some people might argue that a gold bond is a low-risk investment since its gold price can drop or rise due to external parameters.
So, which one should you opt for? How do you choose between the three – RBI Bonds vs FD vs SGB?
Here are some points that can help you make the decision.
Let us start with the common features of these three schemes:
Common Features
| Who can invest? | 1– A person resident in India, A – in her or his individual capacity, or B – in individual capacity on a joint basis, or C – in individual capacity on anyone or survivor basis, or D – on behalf of a minor as father/mother/legal guardian 2– A Hindu Undivided Family |
| Where to buy? | Through banks (Online/Offline). |
| Nomination Facility | Available |
| Joint holding | Yes |
| Payment | Payment can be made through cash or cheques or demand draft or electronic fund transfer. |
Also Read RBI Bonds 2023 or Floating Rate Savings Bonds | Rate of Interest |
RBI Bonds vs FD vs SGB
Also Read Sovereign Gold Bond : Best Returns on Gold Investment
| Parameter | RBI Bonds | Tax Saving FD | SGB |
| Issued by | RBI | Bank | RBI |
| Maturity period | 7 years | 5 years | 8 Years. |
| Interest rate | 7.35% | 4.50% – 6.75% | The return from SGBs are in terms of interest and capital appreciation. Investors get a fixed interest rate of 2.5% per annum. Furthermore, it is over and above the gold price return. |
| Minimum Investment | INR 1000/- | INR 1000/- | 1gm/finally Year |
| Minimum Investment | No maximum limit | 1.5L | Maximum of 4kgs wherein for trusts and similar entities max ceiling is 20kgs. |
| Tax benefit on investment | No tax benefit on investment | Investments up to Rs. 1.5 lakh deductible from taxable income under Section 80C. | No tax benefit on investment |
| Tax treatment of interest | Interest is added to income and taxed according to your slab | Interest is added to income and taxed according to the income slab | TDS is not applicable |
| Calculation of interest | Half-yearly compounded basis | Cumulative, on maturity | SGB offers a 2.50% fixed interest rate per annum. |
| Interest payments | Cumulative or non-cumulative (payable half-yearly) | Cumulative, on maturity | non-cumulative (payable half-yearly) |
| Loan facility | Not eligible for collateral | Can be used as collateral | Yes |
| Risk Factor | No-Risk | No-Risk | Low Risk |
| Premature withdrawal | Premature redemption shall be allowed for specified categories of senior citizens only. | No | Premature withdrawal is applicable only after the 5th year onward on the coupon payment date and is also tradeable if held in Demat form. |
| Senior Citizen Benefit | They may take a premature exit after 4, 5, and 6 years based on age group. | Most of the banks provide FD rates to senior citizens at an extra rate of 0.25% – 1.00% (approx.). | NA |
| Transferability | Unavailable | Unavailable | Available |
Also Read Senior Citizen Savings Scheme | Interest rate | Benefits | SBI | Post Office