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--- | ||
date: 2024-01-26 | ||
comments: true | ||
categories: | ||
- sovereign-gold-bond | ||
- gold | ||
- sgb | ||
- price | ||
hide: | ||
- feedback | ||
description: "How to track Sovereign Gold Bond price and calculate returns." | ||
--- | ||
|
||
# Sovereign Gold Bond | ||
|
||
Reserve Bank of India started issuing a new type of bond called | ||
[Sovereign Gold Bond](https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=1658) (SGB) in November 2015. The bond is issued by | ||
RBI on behalf of the Government of India. Each unit of the bond is | ||
equivalent to a gram of gold. The price of the bond is linked to the | ||
price of the gold. The price is calculated by taking the average of | ||
the closing price of gold of 999 purity for the last 3 business days | ||
of the week. RBI follows the price of gold published by [IBJA](https://ibja.co/). | ||
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<!-- more --> | ||
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The bond also includes an interest component. The interest is paid | ||
every 6 months. The initial bonds were issued with 2.75% | ||
interest. Nowadays the interest is 2.5%. The interest is taxable as | ||
per the income tax slab of the investor. Any capital gains on the bond | ||
are exempted if you hold the bond till maturity. The bond has an 8 | ||
year term with an exit option available from the 5<sup>th</sup> year | ||
onward. In this blog post, we'll explore how to use Paisa to | ||
effectively track your SGBs and calculate your returns. | ||
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||
Let's assume you have `#!ledger 25,000 INR` in your bank account. | ||
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||
```ledger | ||
2015/11/01 Opening Balance | ||
Assets:Checking:SBI 25000.00 INR | ||
Equity:OpeningBalance | ||
``` | ||
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||
Let's assume you bought 8 units of SGB issued on 26<sup>th</sup> | ||
November 2015. The price of a single unit was `#!ledger 2684 INR`. | ||
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||
```ledger | ||
2015/11/26 Buy Sovereign Gold Bond | ||
Assets:Gold:SGB 8 SGB @ 2684.00 INR | ||
Assets:Checking:SBI -21472.00 INR | ||
``` | ||
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||
If you go to the `#!ledger Assets:Gold:SGB` account, you'll see the | ||
following | ||
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||
![Initial Balance](../../images/sgb/balance-1.png) | ||
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Let's add the interest component to the bond. The interest is paid on | ||
26<sup>th</sup> of May and November every year. We need to make two | ||
transactions entries for each interest payment. One from `#!ledger | ||
Income:Interest:Gold:SGB` to `#!ledger Assets:Gold:SGB` and another | ||
from `#!ledger Assets:Gold:SGB` to `#!ledger | ||
Assets:Checking:SBI`. This is necessary to calculate the correct | ||
returns. If you send the interest directly to your bank account, Paisa | ||
will not be able to calculate the correct returns for `#!ledger | ||
Income:Interest:Gold:SGB` account. | ||
|
||
```ledger | ||
2016/05/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2016/05/26 SGB Interest Credit | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2016/11/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2016/11/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2017/05/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2017/05/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2017/11/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2017/11/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2018/05/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2018/05/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2018/11/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2018/11/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2019/05/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2019/05/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2019/11/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2019/11/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB 295.24 INR | ||
Assets:Checking:SBI | ||
2020/05/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2020/05/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2020/11/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2020/11/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2021/05/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2021/05/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2021/11/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2021/11/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2022/05/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2022/05/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2022/11/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2022/11/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2023/05/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2023/05/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
2023/11/26 SGB Interest Credit | ||
Assets:Gold:SGB 295.24 INR | ||
Income:Interest:Gold:SGB | ||
2023/11/26 SGB Interest Withdrawal | ||
Assets:Gold:SGB -295.24 INR | ||
Assets:Checking:SBI | ||
``` | ||
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The final part is the bond settlement. The debit posting includes the | ||
buy price, buy date and the sell price. The gains come from the | ||
capital gains account. | ||
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||
```ledger | ||
2023/11/30 Withdraw Sovereign Gold Bond | ||
Assets:Gold:SGB -8 SGB {2684.00 INR} [2015/11/26] @ 6132.00 INR | ||
Income:CapitalGains:Gold:SGB -27584 INR | ||
Assets:Checking:SBI 49056.00 INR | ||
``` | ||
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It's also possible to track the daily price[^1] of the bond. Since the | ||
bond price is linked to the price of gold, we can use the IBJA gold | ||
price to track the price of the bond. Go to the configuration page and | ||
add a new commodity with the following information. | ||
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||
![Commodity Settings](../../images/sgb/config.png) | ||
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If you go to the `#!ledger Assets:Gold:SGB` account, You can find the | ||
total returns, XIRR and the change of the bond value over time. | ||
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![Final Balance](../../images/sgb/balance-2.png) | ||
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[^1]: The daily price history of IBJA gold price is available only | ||
from 2022. If you have access to the price history, you can ping | ||
me. Alternatively, you can manually add the [price history](../../reference/commodities.md#realestate) to the | ||
ledger file. |
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