I understand Invit bonds can be purchased in Zerodha (IRBINVIT is one of the invit). But I don’t have clarity on how payout works. Any help here is much appreciated.
A few questions: by considering I am investing Rs 1L into Invit, then
Will I get interest/dividends paid to my bank A/C? What is the frequency?
Can I purchase Invit units with received dividends automatically?
How long i can hold invit bonds? Is there any maturity time for this?
The bank gives 6% fixed income to the invested amount(Ex: 1L) , and by 1 year I get 6K, Does Invit also work in this way?
Can I sell it when I need it? if yes, does it work like buying and selling bonds in the secondary market? If yes, then how Invit differ from other G-Sec
I can explain it with respect to PGInvIT as I have experience only with this.
Yes you will get interest/dividend directly to your bank account(with TDS deducted if applicable).
Automatic purchase may not be possible as the dividend is credited to the bank account. However there can exist other indirect solutions.
I think you can hold them as long as they are in the market. I am not aware of any maturity time for these units.
Normally the InvIT company announces a dividend/share(~every quarter). If you hold the shares on the ex-date, then the dividend is credited to your account every quarter. The other rule with InvITs is that they need to distribute 90% of the profits that they make.
Yes you can sell when needed provided there is good liquidity. For PGInvIT there is enough liquidity. You can find out liquidity from the marketdepth of the corresponding InvIT. Yes it works similar to buying and selling bonds. however in Indian context, the liquidity is still not so good for most of the Bonds.
The income from the InvITs need not be constant(as it depends on the profits they make) but for G-Secs the interest payout is constant and it has sovereign guarantee. It also has a maturity date when you receive back the face value of the bond.