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What are Government Bonds Features and Benefits of Government Bonds

Government bonds offer stability and reliable returns, making them a solid investment choice. With features like low risk and tax benefits, these bonds provide a secure way to grow your portfolio. Learn about the unique advantages and key features of government bonds at Golden Pi.

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What are Government Bonds Features and Benefits of Government Bonds

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  1. What are Government Bonds: Features and Benefits of Government Bonds

  2. Features of Government Bonds Overview • RBI issues government bonds on behalf of the government. • Municipal corporations and other government bodies also issue bonds under RBI and SEBI guidelines. • Bonds have diverse tenures, steady interest rates, regular coupon payments, and transparent regulations.

  3. Diverse Tenures • Generally range between 5 to 40 years. • Long-term bonds for long-term goals. • Short-term bonds as short as one year.

  4. Steady Interest Rate ⚬Pre-fixed rate of interest. ⚬Some exceptions like floating rate bonds or zero coupon bonds.

  5. Regular Coupon Payments • Semi-annual basis. • Pre-set dates for coupon payments.

  6. Transparent Regulations and Operations • Monitored by RBI. • Complete transparency from issuance to maturity.

  7. Diverse Types of Government Bonds Fixed Rate Bonds • Fixed interest rate throughout tenure. • Market fluctuations have no influence.

  8. Floating Rate Bonds • Interest rate reset at pre-decided intervals. • Base rate and fixed spread system.

  9. Capital-Indexed Bonds • Linked with Consumer Price Index (CPI). • Protects investments against inflation.

  10. Inflation-Indexed Bonds • Protects against inflation. • Both accrued interest and principal linked with CPI.

  11. Bonds with Call/Put Options • Call: Buyback by the government. • Put: Sell back by the investor. • Can have both options.

  12. Special Securities • Higher interest rates. • Issued to entities like food corporations, oil companies. • Not accessible to retail investors.

  13. STRIPS (Separate Trading of Registered Interest and Principal of Securities) • Bonds divided into individual coupons and principal

  14. Thank you! To know more, visit: https://goldenpi.com/blog/essentials/bond-market/what-are-government-bonds-features-and-benefits-o f-government-bonds/

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