SGB Analyzer

Detailed Comparison

SGB vs Fixed Deposit: Which is Better? (2026)

Gold bonds vs bank deposits - risk and return analysis

Sovereign Gold Bonds vs Fixed Deposits - the classic growth vs safety debate. While FDs offer guaranteed returns, SGBs have historically delivered higher returns with tax benefits. This comparison helps you understand the trade-offs and choose based on your risk appetite and investment goals.

Quick Verdict

SGB suits growth-oriented investors comfortable with gold price volatility. FD suits conservative investors prioritizing capital safety over higher returns.

SGB wins: 4 metricsFixed Deposit wins: 4 metrics

Side-by-Side Comparison

Metric	Sovereign Gold Bond	Fixed Deposit
Expected Returns SGB has historically outperformed	8-12% (gold + 2.5%)	6-7.5%
Return Guarantee FD returns are certain	Only 2.5% interest	100% guaranteed
Tax Efficiency Secondary SGB buyers pay 12.5% LTCG from Apr 2026	Tax-free (original subscribers only)	Fully taxable at slab rate
Inflation Hedge Gold hedges against inflation	Yes (gold rises)	No (fixed rate)
Capital Safety FD capital is guaranteed	Gold price dependent	100% safe
Liquidity FD easier to break	Moderate	High (with penalty)
Lock-in FD has flexible tenures	5 years (RBI exit)	Flexible (7 days+)
Portfolio Diversification Gold diversifies portfolio	Yes (gold exposure)	No (rupee asset)

SGB Advantages

Historically higher returns (10%+ CAGR)
Tax-free capital gains at maturity (original subscribers only)
Inflation hedge - gold rises with inflation
Portfolio diversification benefit
Interest income (2.5%) on top of gold returns

Fixed Deposit Advantages

Guaranteed returns - no uncertainty
Capital fully protected
Flexible tenure options
Easy liquidity with penalty
Senior citizen extra rates

Which Should You Choose?

Choose SGB if you...

Growth-oriented investors
Those seeking inflation hedge
Portfolio diversification seekers
Long-term investors (5+ years)

Choose Fixed Deposit if you...

Conservative investors
Retirees needing fixed income
Short-term parking of funds
Those uncomfortable with volatility

Detailed Analysis

**Historical Returns** Gold has delivered 10-11% CAGR over the last 20 years in India. Add 2.5% SGB interest, effective returns can be 12-14%. FDs typically offer 6-7% pre-tax, 4-5% post-tax.

**Risk Consideration** FD returns are certain. SGB returns depend on gold prices which can be volatile in short term. However, gold has never given negative returns over any 8-year period in India.

**Tax Impact (Updated for Budget 2026)** FD interest is fully taxable at your slab rate. For original SGB subscribers, maturity gains are tax-free. However, from April 2026, secondary market SGB buyers pay 12.5% LTCG. The 2.5% interest on SGB is always taxable at slab rate.

Calculate Your SGB Returns

Use our calculator to estimate your potential returns based on investment amount and holding period.

Frequently Asked Questions

Both are very safe - FD by banks (DICGC insured up to ₹5 lakh), SGB by Government of India. The difference is return uncertainty: FD returns are fixed, SGB depends on gold prices.

Yes, in short term. But historically, gold has never underperformed FDs over 8+ year periods in India. The 2.5% annual interest also provides cushion.

Yes, this is often the best approach. Keep emergency funds in FD for guaranteed access, and invest long-term savings in SGB for growth and tax benefits.

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