You can invest through a broker or bank or mutual fund. Now many fintech companies also offer investment options in bonds.
Those who fear equity markets to their mutual fund (M Utual Fund ) and government bonds are a safe alternative. Securities like government bonds offer the highest protection in terms of interest and principal payment. As far as investing in equities is concerned, people have a lot of knowledge about it, but there is no information about how and from where one can invest in bonds. There are many benefits to investing in bonds, but the bond market is a bit complicated.
How to buy government bonds
There are many options to buy government bonds. You through the NSE’s application or broker or bank or mutual fund (M Utual Fund may invest through). Now many fintech companies also offer investment options in bonds, but before investing through such companies, their branch and registered license should be checked.
NSE goBID mobile application
Retail investors can buy government bonds in the primary market through the NSE goBID mobile application. This application was launched in the year 2018 to enable small investors to make direct investments in Treasury bills and government securities. Before downloading the application, you are required to register on NSE. After that you can invest online in government bonds.
Investing in bonds through banks
Many bonds like Reserve Bank of India (RBI) floating rate bonds can be bought from banks. For more information about this, you can contact the nearest bank branch.
Full-service broker
Brokerage companies offer a variety of services, including the option of investing in bonds. You can invest in bonds using the website or mobile application of such full-service brokers. These brokers also inform you whenever there is a bond issue.
Investing in Bonds through Mutual Funds
If you invest directly in bonds, then you have to pay a lot of tax and the interest earned from the bond is also taxable. If you are in a higher tax bracket, then a major part of your return goes into tax. In such a situation, it is wise to invest in bonds through mutual funds. You should prefer gilt funds, which invest only in government securities.
It is better to invest through gilt funds than directly investing in government securities, the main advantage of which is that the returns you get in gilt funds are counted according to the capital gain tax which is currently 20%, i.e. 30%. In this way, you can save up to 10% tax.
What the experts say
A broker or advisor can help you decide which bonds you should invest in and how much. The investor should decide on the basis of his target and position. CA Shukan Makwana, director and SEBI-registered investment advisor, Neptune Capital, explains, “Investing in the bond market is not as easy as equities. You must have an understanding of the bond market. People who are in higher tax slab have to pay more tax on investment in bonds. Investors with higher slabs should choose gilt funds that invest in government securities instead of investing directly in government bonds.
