1. Interested retail investors can buy Government bonds using NSE's mobile/web based app called “NSE goBID“, after completing an online process of registration.
2. Through this app, they can buy:-
a) Long-dated bonds of 5-40 years holding time and
b) Treasury bills (T-bills) of less than 1 year holding time.
3. Generally, HNIs who have excess money utilize long-dated bonds for wealth "protection", by staying invested for prolonged periods, even at low returns (like 8% p.a. paid half-yearly), availing the Government guarantee.
4. On the other hand, other retail investors, with limited savings, look for wealth "creation", by investing in equity-oriented products for higher returns, and in time horizons suiting their financial needs and goals.
5. Government-backed bonds can be a good option if a retail investor is building a very long-term DIY diversified Equity-Debt portfolio, and for this Tax-free Government Bonds are more suitable because interest income is tax free, especially if he is in the maximum 30% tax bracket.
6. While a person should hold a government bond till its full tenure as applicable, he can sell them earlier in the secondary market as most are listed there, although the trading volumes are generally low due to low demand for bonds, as most bond investors generally buy them for very long holding periods and don't sell mid-way.
7. Hence, one should ensure that maturity periods of his bonds are in line with his investment horizon.
8. Sale of listed government bonds before 1 year attracts STCG Tax as per one's tax slab, and thereafter LTCG Tax of 10% with no indexation benefit.
2. Through this app, they can buy:-
a) Long-dated bonds of 5-40 years holding time and
b) Treasury bills (T-bills) of less than 1 year holding time.
3. Generally, HNIs who have excess money utilize long-dated bonds for wealth "protection", by staying invested for prolonged periods, even at low returns (like 8% p.a. paid half-yearly), availing the Government guarantee.
4. On the other hand, other retail investors, with limited savings, look for wealth "creation", by investing in equity-oriented products for higher returns, and in time horizons suiting their financial needs and goals.
5. Government-backed bonds can be a good option if a retail investor is building a very long-term DIY diversified Equity-Debt portfolio, and for this Tax-free Government Bonds are more suitable because interest income is tax free, especially if he is in the maximum 30% tax bracket.
6. While a person should hold a government bond till its full tenure as applicable, he can sell them earlier in the secondary market as most are listed there, although the trading volumes are generally low due to low demand for bonds, as most bond investors generally buy them for very long holding periods and don't sell mid-way.
7. Hence, one should ensure that maturity periods of his bonds are in line with his investment horizon.
8. Sale of listed government bonds before 1 year attracts STCG Tax as per one's tax slab, and thereafter LTCG Tax of 10% with no indexation benefit.