The launch of the Bharat Bond ETF has given Indian investors another fixed-income investment option. It is the first exchange-traded fund in India. Compared to other debt mutual funds, it is a very safe fund. The fund is available in 3-year and 10-year maturities. Due to good returns and more secure FD investors can now think of investing in Bharat Bond ETF. Let us know how much better Bharat Bond ETF is than FD.
Good news for Jaypee land buyers, lenders approve NBCC bid
Investment period In FD, the customer can choose the period from 7 days to 10 years in fixed deposits. In this, banks take penalty on withdrawal of prematurity. Bharat Bond ETF comes with 2 fixed maturities. These are 3 years and 10 years. In this, one can sell units in the secondary market and exit in between. However, the secondary market may depend on liquidity in the trade scrip.
Security Talking about security, both FD and Bharat Bond ETFs do not guarantee the safety of the original capital. In the case of FDs, there is a guarantee of only 1 lakh rupees of principal capital per bank branch, which is under the Deposit Insurance and Credit Guarantee Corporation (DICGC). There is also a belief that the government will never let the depositors' money sink. On the other hand, security in Bharat Bond ETF is higher than FD. It invests only in bonds issued by government companies. Initially, Bharat Bond ETF will invest only in bonds rated AAA. The risk of default is very low.
Moody's slashed country's growth rate due to FY20, falls to 4.9%
Return Apart from a few co-operative banks and small finance banks, most mainstream commercial banks in India pay between 6 and 7 %on fixed deposits for a period ranging from one to 10 years. The returns in FD are the same throughout the period of investment. Investors in Bharat Bond ETF can expect to get 6.70 %on 3-year maturity and 7.6 %on 10-year maturity.
Tax rebate The interest income of a bank fixed deposit is taxable income and is taxed only according to the tax slab of the investor. If an investor is in the highest tax slab, then it will pay 31.2 %tax on FD interest. Debt funds are very good in terms of saving tax in case of holding for more than 3 years. In case of holding for more than 3 years, the tax rate on these is 20 % with indexing.
Gold price rises due to international demand, silver also shines