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Investments in Government Bonds

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Posted by : NIFM
26 August, 2013, 3:45 PM
The initiates taken by RBI to stop the falling of Rupees value against the Dollar this resulting the effects on low liquidity in the system and arising the Rate of Interest. To overcome from this situation and managing the proper liquidity for proper flow and availability of funds to production industries, Central Bank has planned for purchasing the Govt. Bonds of 8000 Crore from options open market. The question arises here can a normal investor, invest in Govt. Bonds and the answer is yes. Now as per current scenario investors have the opportunity to include the Govt. Bonds in their investment portfolio as Bond yield of these bonds around 10 percent. Investors should hold these bonds till their maturity as exit before maturity will not give more returns. Govt. Bonds available for different maturity tenures like 3 Months, 6 Months, One Year, Two Years, Five Years, Ten Years etc. The first benefit to invest in Govt. bonds is zero credit risk and second benefit is that investor will get guarantee for longer period with good returns. As per current situation and continues falling of Rupee value these bonds are more attractive and secure for investors to get the high returns of Yield to Maturity (YTM). YTM is the percentage of return which investor will get at the time of maturity. The bond rates are down due to some initiates and plans taken by RBI to stop the falling of Rupee value. Investors can purchase the Govt. bonds from the registered primary dealers appointed by RBI. The primary dealer list is available on RBI website. Investors can open an account with them and purchase the bonds.

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