Post Office Gold scheme review

By Team Gullak

Nov 13, 2024

5 min read

The Indian Postal office offers a convenient way to invest in Gold while eliminating the hassle of holding physical gold. This is done via investing in Sovereign Gold bonds. In this article, we will understand the Post office gold scheme, its pros and cons, how to apply & compare it against other gold schemes.

What are Post office gold schemes?

Post office gold schemes allow you to invest in Sovereign Gold Bonds. These post office gold bonds are bond papers with denominations in grams of gold. 1 unit of post office gold bond represents 1 gm of physical gold. Under the post office gold bond schemes, you can earn extra 2.5% interest on top of gold price increase. These schemes open in tranches, 3-4 times a year.

Key features of post office gold schemes:

1. Returns: Gold Price increase + 2.5% extra

2. Interest form: INR

3. Interest type: Simple interest

4. Lock-in period/maturity period: 5 years lock-in and 8 years maturity period. You can withdraw only as cash

5. Flexibility: One time investments when the tranches open(3-4 times a year)

How to enrol into the gold bond scheme in post office?

Step 1: Visit the nearest post office branch

Step 2: Fill the form and submit the necessary documents

Step 3: Make your payment

Step 4: Once payment is done, you will receive your proof of investment

Are there any alternatives to post office gold bond schemes?

If you’re looking for an alternative gold scheme that could earn you higher returns, Gullak Gold+ can be the perfect choice for you.

Gullak Gold+ is a gold investment scheme from the Gullak app. Using Gullak Gold+, you can increase your gold quantity by 5% every year. So, 100 gms invested in Gullak Gold+ will become 105 gms in 1 year and 148 gms in 8 years. On top of this, you also benefit from gold price increase.

Key features of Gullak Gold+:

Extra interest: 5% pa

Interest form: Gold grams

Interest type: Compounded annually

Lock-in or maturity period: None, you can withdraw anytime as cash or gold or redeem jewellery at Gullak’s partner stores like Caratlane by Tanishq

Flexibility: Can invest anytime via SIPs or one-time transactions

Now that we have some idea about both the assets, let us compare both Gullak Gold+ and post office gold scheme under different parameters:

Table: post office gold bond scheme vs Gullak Gold+

Why might post office gold schemes not be for you?

There are essentially 3 reasons why post office gold bond schemes might not suit your investment needs:

1. You want flexibility on your investments: Post office gold schemes generally come with long lock-in periods of 8 years and have a maturity period of 5 years. If you are someone who is not okay to lock a big amount over extended periods, this might not be ideal for you.

2. If you are looking for higher returns, the extra 2.5% with post office gold bonds is in the form of simple interest i.e., if you invest ₹1,00,000, you will get ₹2500(2.5%) every year. However, with Gullak Gold+, you get the benefit of compound interest. So, 100 gms will become 105gms in one year, next year you’ll get 5% again on top of this 105 gms and in 8 years this 100 gms will become 148 gms.

3. Post office gold bonds are essentially Sovereign Gold Bonds(SGBs). After the budget 2024, many experts predict that the government might not be introducing SGBs anymore, since the extra 2.5% is becoming expensive for them.

Concluding thoughts on Post office gold schemes

While post office gold schemes are a great way to invest in gold, Gullak Gold+ provides higher returns to investors and tackles the drawbacks of post office gold bonds like long lock-in periods. With the news of the government potentially discontinuing gold bonds, waiting for SGBs might lead to you missing out on gold’s price appreciation. That being said, the decision ultimately lies with you as an investor on which gold asset to choose.