Anil Rego of Right Horizons advises to investors on CNBC-TV18 about the best tax free bonds to invest in. He recommends investing in Rural Electrification Corporation (REC) with a 15-year investment duration upto Rs 10 lakh.
Below is the edited transcript of his interview to CNBC-TV18.
Q: What are the best tax free bonds currently to invest in?
A: Right now, Rural Electrification Corporation (REC) is open and many of them are also to follow. There is nothing much between them as interest rates will be similar. The bonds come with a 10-15 and 20 year options and there are different interest rates.
If one’s investment is above Rs 10 lakh or it is Rs 10 lakh and below then the best investment size is to invest is Rs 10 lakh. So you come under individual category and do not get clubbed into the high net worth individuals (HNIs).
Even if one has large sum of money to invest then rather phase it over the multiple bond issues. It is definitely a good investment to make because on post tax basis one gets 8.71 percent which on pre tax basis is 12.55.
It means if a bank fixed deposit gave 12.55 percent then you would get 8.7. So, definitely a good thing to use and I would suggest looking at 15 years and investment up to Rs 10 lakh.
Caller Q: The lock-in period for LIC Money Plus policy is over. Should I continue with the plan or surrender it?
A: The period where he already has is high; loads are over. So he rather keeps it maybe watch out for a point when market is doing better. Right now his negative is a combination of whatever loads he paid plus market volatility.
So, one could probably wait out for a better market condition and then exit and move into options like balance funds as that will also have some bit of equity and you can choose any of the good performing balance funds.