What is Bharat Bond ETF:
Bharat Bond ETF is an Exchange-Traded Fund (ETF) launched by the Government of India. It was introduced to provide retail investors with an opportunity to invest in fixed-income securities issued by government-owned entities or public sector undertakings (PSUs) in India.
Introduction:
Investing in financial instruments is a crucial decision that requires careful consideration. Two popular investment options in India are Bharat Bond and Fixed Deposits (FDs). In this article, we will delve into the advantages of Bharat Bond over FDs and discuss how Bharat Bond investments can be traded. We will also highlight the tax benefits and the safety of investing in Bharat Bonds.
Higher Interest Rates:
When it comes to earning interest on your investment, Bharat Bond has an edge over FDs. While FDs typically offer interest rates ranging from 5% to 6.5%, Bharat Bond provides an attractive interest rate of 7.75%. This higher interest rate can make a significant difference in your overall returns, as every percentage point matters in the long run.
Risk:
Once you invest into Bharat bond ETF it will show you negative return for a day/week/month after that it will settle down. This fund is for long term.
Note: Do not worry about you are short term return
Tax Benefits:
Investing in Bharat Bonds offers additional advantages in terms of tax benefits. While the interest earned on FDs is subject to taxation, Bharat Bond investments come with tax efficiency, particularly for individual investors. This means that you can potentially maximize your returns by reducing your tax liabilities.
Secure Investments:
When you deposit money into an FD, it is essentially lent to customers in the form of loans. While this may seem secure, investing in Bharat Bond offers a higher level of safety. Bharat Bond invests your money as loans to reputable government-owned entities such as the railway power grid, Indian oil, and NHAI (National Highways Authority of India). With the backing of the government, the safety of your investment is significantly enhanced, making it almost 99.9% secure.
Trading Opportunities with Bharat Bonds:
In addition to the aforementioned benefits, Bharat Bond investments can also be utilized for trading purposes. Here’s how it works:
Pledging Bharat Bonds:
You have the option to pledge your Bharat Bonds as collateral for trading. By doing so, you can unlock the value of your investment and access funds for trading purposes. When you pledge your bonds, you typically receive 90% of your investment amount for trading, while a 10% haircut is applied.
Trading Options:
Once you have pledged your Bharat Bonds, you can engage in various trading activities, including equity intraday, option selling, future buying and selling, among others. However, it is important to note that trading involves risks, and it is advisable to gain a thorough understanding of the trading strategies and market dynamics before venturing into these activities.
How to Buy Bharat Bond ETF:
- Choose a Stockbroker
- Open a Demat and Trading Account
- Complete the Account Opening Process
- Fund your Trading Account
- Place an Order
- Set the Price and Quantity
- Review and Confirm
- Execute the Order
- Monitor and Manage
Conclusion:
Bharat Bond offers several advantages over FDs, such as higher interest rates, tax benefits, and increased investment security.. With the backing of reputable government-owned entities, investing in Bharat Bonds ensures the safety of your funds. Additionally, by pledging your Bharat Bonds, you can access funds for trading purposes, opening up opportunities in equity, options, and futures trading. However, it is essential to approach trading with caution and seek guidance from professionals to minimize risks and maximize returns..
