Infrastructure Bonds – Benefit
Investment in long term infrastructure bonds would give you the following benefits:
Tax Saving - A long term infrastructure bond offers a tax benefit in the form of a deduction. The amount of tax saved would depend on the tax bracket one would fall under. To illustrate this benefit :
For a person in the highest tax bracket, a Rs 20,000 investment in long term infrastructure bonds could save a tax of around Rs 6,000 (Rs 20,000 X 30%)
For a person in the 20% tax bracket, an investment of Rs 20,000 in long term infrastructure bonds could give him a saving of around Rs 4,000 (20,000 X 20%).
(Education cess ignored in illustration to keep it simple)
Assured Returns - An investment in infrastructure bond assures you a reasonable rate of return. So as an investor you are guaranteed peace of mind over your investment!!!!
Concluding Thoughts
InvestmentYogi wants you to keep in mind the following while investing in long term infrastructure bonds.
-A long term investment with a period of 10 years and a lock in feature could block your money. So take a call after considering your financial situation.
-Infrastructure bonds offer pre-determined interest rates, which may be lower than other investment options; hence they may not offer much protection against
inflation.
-Borrowing money by pledging infrastructure bonds with banks would fetch you an amount, which would depend on the market value of the bond. Banks also take into account the creditability of the underlying issuer, in their loan evaluation process.
-The yield of the bond along with its terms and conditions will be specified by its issuer. However it must be understood that the yield of the long term infrastructure bond will not be higher than the yield of other government securities or corresponding residual maturity schemes.
Investment in long term infrastructure bonds would give you the following benefits:
Tax Saving - A long term infrastructure bond offers a tax benefit in the form of a deduction. The amount of tax saved would depend on the tax bracket one would fall under. To illustrate this benefit :
For a person in the highest tax bracket, a Rs 20,000 investment in long term infrastructure bonds could save a tax of around Rs 6,000 (Rs 20,000 X 30%)
For a person in the 20% tax bracket, an investment of Rs 20,000 in long term infrastructure bonds could give him a saving of around Rs 4,000 (20,000 X 20%).
(Education cess ignored in illustration to keep it simple)
Assured Returns - An investment in infrastructure bond assures you a reasonable rate of return. So as an investor you are guaranteed peace of mind over your investment!!!!
Concluding Thoughts
InvestmentYogi wants you to keep in mind the following while investing in long term infrastructure bonds.
-A long term investment with a period of 10 years and a lock in feature could block your money. So take a call after considering your financial situation.
-Infrastructure bonds offer pre-determined interest rates, which may be lower than other investment options; hence they may not offer much protection against
inflation.
-Borrowing money by pledging infrastructure bonds with banks would fetch you an amount, which would depend on the market value of the bond. Banks also take into account the creditability of the underlying issuer, in their loan evaluation process.
-The yield of the bond along with its terms and conditions will be specified by its issuer. However it must be understood that the yield of the long term infrastructure bond will not be higher than the yield of other government securities or corresponding residual maturity schemes.
