How to Invest in Government Bonds?
Government is something that repulses the very souls of us humans; whichever party or person it might be, we are never pleased with the government there is always a better way to get things done and that way certainly is not the government’s way. Though we live with this constant affinity for government there is one thing that the government offers and it is also something that we look on to lustfully.
What is it?
Why is it?
This is also the very reason why government Bonds are preferred over the other. Govt. bonds give fixed returns and tax benefits. According to Investopedia, a government bond is a debt security issued by a government to support government spending. Before investing in government bonds, investors need to assess several risks associated with the country, such as country risk, political risk, inflation risk, and interest rate risk, although the government usually has low credit risk.
How to do it
Liquidity being the issue for retail investors, this investment avenue has mostly been out of reach for the common man. Initiatives have been taken by the government; in the primary issuances of G-Secs, where prospective buyers have to bid, there is a non-competitive bidding section for retail investors. In spite of non-competitive being available in G-Secs and T-Bills, it has not taken off, primarily due to lack of awareness. Execution also is an issue for the common man.
One can apply through online as services have already begun for this or through Authorized Agents like Goodwill who not only support you but also guide you with their expert opinions.
The govt bonds are normally issued with tax benefits which may also be availed. This is used sometimes to invest for availing capital gains tax on selling some fixed assets.
Despite all the efforts to execute the trade while buying, the only issue is secondary market liquidity. If there are not many buyers or sellers in the secondary market, if and when you want to sell, there is an issue. Hopefully, with the spread of investor base, with more people holding G-Secs, the requirement of trading and hence liquidity will start developing.
But, this is a growing arena with tremendous scope in the future; it’s worth investing in but with proper knowledge and with proper support, and for this very reason contact Goodwill at email@example.com or at +91 80122 78000.