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Benefits of Investing in Government Bonds in India

 

Before knowing the benefits of Invest in Government Bonds,

we will see What is Government Bonds India and

how do government bonds work in India.


A government bonds is a financial security used by the government of the

country to mainly regulate the volume of circulating cash in the economy.

Investing in government bonds is much more secure than doing the same

in the stock market, because you can be almost certain that u will be able to

redeem it. In case of any cash crunch faced by the government, it can always

print new cash to pay off the debts. However, one can never be sure to

regain his invested capital, because like any other investment risk, bonds

prices can fluctuate as well.

The primary issuers of bonds are by the Government Security of India

(G-Sec) governments of Japan (JGBs), America's U.S. Treasuries, Italy's

BTPs, France (OATS), the Bonds of Germany and the Gilts of England.

The latter is the oldest issuer of bonds, starting in 1693 with the purpose of

collecting money for their war against France.

Some well-known types of government bonds in India called as

Government Securities (G-Secs Bonds).

You can buy Government bonds in India as well

Sell Government Bonds in India and how to buy government bonds in India through BondsIndia.com

They are the safest among other types of government bonds in India

as far as public investment in the country is concerned.

But you pay a price for this security by earning a very low interest

on it. However, all the interest income is free of tax.

  1. Fixed Rate Government Bonds

  2. Sovereign Gold Bonds

  3. Inflation Indexed Bonds

  4. 7.75% GOI Savings Bond

  5. Bonds with Call or Put Option

These Government bonds include treasury bills (10 years maturity starting

from $1000 to $1,000,000. Although America no longer issues new treasury

bonds, one can still invest by buying it from the secondary market.

Treasury notes have a maturity of 2 to 10 years valued at $1000.

Know also when is the best time to buy government bonds.

There are two kinds of bids to this note: competitive and

noncompetitive.

Treasury Inflation Protected Security (TIPS) are bonds sold at $1000, with a

5, 10, or 20-year maturity. The principal is adjusted half yearly to even out

the inflation effect on it, after which a fixed rate of capital interest is

calculated on it. Treasury bills are more like cash management tools with

maturity tenure of 4 to 26 weeks.



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