Moneyhive Investments - Debt

WHY DEBT?

Debt investments are primarily to ensure your capital protection. Besides they also offer benefits like tax savings, alternate to physical gold. They also provide flexibility of investment horizon. Various types of debt securities are:

Tax Free Bonds - Tax free bonds are popular investment option among investors due to the taxation benefit that they offer. These bonds, generally issued by Government backed entities, are exempt from taxation on the interest income received from such instruments under the Income Tax Act, 1961. We recommend these type of bonds only to very risk-averse investors with a lot of cash at hand (above Rs.100,000).

Capital Gains Bonds - Investments in bonds issued by the Rural Electrification Corporation (REC) and NHAI are at present eligible for capital gains tax savings. Gains made out of a capital transfer need to be invested in the above bonds within six months of sale of capital assets in order for the proceeds of such sale to be exempt from capital gains tax.

Government Of India Savings (Taxable) Bonds - Bonds may be held by an individual, NRI, HUF, Charitable institution or University.

There is no maximum limit for investment. Bonds are issued at a minimum amount of Rs.1000/- (face value) and in multiples thereof.

Interest on bonds will be taxable under IT Act, 1961. The bonds will be exempted from wealth tax under the Wealth Tax Act, 1957.

Sovereign Gold Bonds - SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.

The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

Fixed Deposits -  Fixed deposit is a financial instrument provided by banks which provides investors with a higher rate of interest than a regular savings account, until the given maturity date. It gives you guaranteed returns but taxable.

WHY MONEYHIVE?

Moneyhive will help you identify right securities that suits your requirement such as capital protection, tax savings, regular income keeping in mind the time horizon as well.