For retail investors intending to purchase bonds in lot size of say few lakh rupees, when there is no primary issue available or the primary issue is not matching up to the risk-return profile expected, one should go for purchases in the secondary market.
Bonds offer interest and capital appreciation to investors. It is better to know the basis of taxation and the rate of tax.
In the highest tax bracket it would still make sense to go in for the 6 per cent tax free bond because the final rate that they bear is still higher than what they would face otherwise.
Though lending rates decline is good news for home loan buyers, decline in FD rates investors worry. With rates for larger deposits falling to 4% level retail investors will feel the pinch soon.
In a falling interest rate regime, traditional fixed deposits turn unattractive and you have to look for the right options.
Interest received on application money paid in public offers for stocks, bonds, NCD and rights issue is subject to income tax.
PPF should continue to offer positive real returns. One should look at his goals and risk profile before investing.
As government has decided to cut the interest rate on the small saving schemes, it is time to revisit the investment strategy.
As more corporate bonds are issued to a wide array of investors, there is a high possibility that the liquidity in the bond market will improve.
The National Highways Authority of India will start the sale of tax-free bonds on Thursday, December 17 with a plan to raise Rs 10,000 crore. The issue closes on December 31.
Indian railway finance corporation raises Rs 10796 crore as against the issue size of Rs 4532 crore.
Watch the interview of Vishal Dhawan, Plan Ahead Wealth Advisors with CNBC-TV18's Sumaira Abidi, in which he shared his view on investing in tax-free bonds in wake of the recent Reserve Bank of India (RBI) rate cut.
"By the end of Day 1 ie by 5.00 PM the issue was oversubscribed by 11.04 times of the base issue size of Rs 400 crore and 6.31 times of the overall issue size of Rs 700 crore," the company said in a statement.
The company will open the public issue of Rs 700 crore tax-free bonds on September 23 for which the government had given approval, NTPC Chairman and Managing Director A K Jha told reporters in a press conference here.
Given the tax free interest on offer and the liquidity, it is a good investment option for fixed income investor.
Never confuse between pre-tax returns and post tax- returns. Also compare returns taking into account the tax slab the individual falls in.
Contrary to general perception, debt investments are exposed to risks. Never ignore these risks. Also keep a track of post tax returns.
Know the mistakes generally committed by the investors and then try to avoid committing them.
Bankers have said there is more room to cut deposit rates which can help bring down lending rates, but fear that competing savings instruments like PPF and tax-free bonds will limit their ability
The Corporate Affairs Ministry has said that tax-free bonds providing more yield than prevailing bank rates would not violate provisions of the Companies Act.
Fixed income investors have to realign their investment strategy in FY2015-2016 as interest rates begin downward journey. Investors will be better off choosing investment options such as mutual funds, bonds, fixed deposits based on their tax slabs and risk taking ability.
One aspect in favour of IFCI is that it is owned by Government of India, which makes the risk of default very low. However tax free bonds are offering higher post-tax yield for individuals in 20-30% tax slab.
There are investments that do not bring in any respite in the form of deduction from taxable income. In some cases the returns offered by the investments are taxable and some investments make investors pay taxes on accrual, even before investors receive returns.
The issue was oversubscribed on the first day itself, with the Bank receiving bids for an amount of Rs 1,252 crore in all the four categories as against the total issue size of Rs 1,000 crore.
Few tax free bonds are being issued in the market. It will probably be the last tranche and so a last chance for investors who missed out previously. Among these IRFC, REC and HUDCO are well known to investors.