Are G-Secs inside the LIC fund safe - yes. Should you invest? That depends on your risk profile etc. Remember, the reason why Gilt funds have done well recently is because interest rates have fallen sharply. The returns won’t be so great in the rates rise. If you aren’t aware of the relationship between bonds and interest rated, I’d recommend you check out the debt funds module on Varsity:
@Hum_Sa Back in June, I had asked the same question to NPS and I didn’t receive any concrete answer to this.
I then asked the finance and taxation team in my office but there too I didn’t receive a satisfying answer.
I don’t know where did I ask on the internet somewhere or either @quicko answered on this forum. I checked my activity but couldn’t find any trace of it. But the answer was NPS Tier 2 has 3 different components - ECG. E - Equity, C- Corporate Bonds and G - Govt bonds. In your NPS Tier 2 transaction statement, you can see the distribution between the E,C and G components.
So the Equity taxation rules would apply for redemption of Equity units. And the Corporate Bonds and Govt Bonds would be treated as Debt instruments. Quicko can confirm the same and correct me if I am wrong. While redeeming you can decide which units (Equity, Corporate Debt and Govt Securities) and how much you want to redeem.
BTW, NPS allows you to change scheme distribution and the Pension fund manager once a year. And FYI, it does not incur any tax liability. I had confirmed this with NPS. Back in March, I had switched my Pension fund manager and also reduced Corporate bonds and Govt Securities ratio while increased the Equity portion to the maximum allowed 75% to switch the NPS vehicle to 4th gear. Also, I had invested Rs 50,000 in Tier 1 as an additional tax saving contribution under 80CCD (1B). So NPS for me has been the best performing instrument for 2020.
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This is really helpful. Thanks for your factful response and helping out. Me to starting utilizing the full tax benefits of NPS 1 via 50K and employer contri. But not also want to enter the Tier 2.
Prior to moving into Tier 2 just had lots of doubts and felt this would be the best forum.
The flexibility of moving from T2 to T1 and changing % allocation is really a good option.
Is it possible to change the fund manager online or is it a a physical process involving going to POP?
Really good point @Bhuvan. But couple of points, 1) in India rates will not go down further (USA and Europe are different). 2) Specific to LIC - G they have very long term G - Sec bonds with int rates of 9+ % . That will keep the return on G portfolio higher for long term. Only the new money needs to be invested at lower rates of 5 to 7 % and that too might be for 2/3 years post which inflation will push the rates up in India. Europse and USA yields will remain low and that would result in flow of foreign money to indian equities and debt instruments. Dollar going down will also help the money flow to India.
Doesn’t work that way 
Fund managers churn the portfolio across the yield curve to position themselves for interest rate changes. You can check out the monthly portfolios of the fund to get an idea.
Agreed. but frankly speaking, out of more then 5000 MF schemes many have performed so badly.
Do they provide Transaction statements of their MF schemes? Are they truly transparent?
Switching units from T2 to T1 may incur capital gains and thus tax liability, if I am not wrong. @Quicko please help.
100% online. On one of the menu you would find the option. Just remember only one PFM can be chosen for entire portfolio. You can’t be picky like you want T1 to be managed by HDFC and T2 by SBI. You can’t choose Equity managed by HDFC and Govt Securities by LIC. So no heterogeneous combination allowed as of now. Only blanket selection of a particular PFM. Once a year you are allowed to switch and rebalance portfolio and scheme percentage distribution without any tax liability.
@This is possible. I have different for T1 and T2
Also no tax on moving funds from T2 to T1
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Ok. Thanks for the information. I don’t know but when I had tried switching somehow it didn’t let me do so. There may be some fine print that I missed. Maybe. Regarding T2 to T1, technically it’s redeeming from T2 so capital gains and tax liability should apply. No? As I mentioned I am not sure about this and I may be wrong. Hence if @quicko is listening, he may confirm.
Looks like @Quicko is on a looooong weekend vacation. 
Meanwhile, @Hum_Sa I suggest you also register for D-Remit to get same-day NAV for your NPS investments.
Just visit eNPS website and click on ‘National Pension System’ and then click on ‘Register for D-Remit’ and proceed further with the instructions on your screen. Once D-Remit feature is activated, it creates unique virtual bank accounts for your NPS Tier 1 and 2, which you have to add as a beneficiary in your bank account, and through netbanking/ mobile banking you can transfer funds to the virtual accounts before 9:30 am to get the same-day NAV.
Great thanks a lot for the advice. Will do it asap. I saw your thread on SGBs too. I feel spread the buying buy bonds from secondary market maturing at different dates. Best part is no tax on SGB gains provided gold moves up.
Silver - Do you think long term charts look good and what is the best option to do SIP in silver?
Yes. I do have a few SGB as I have mentioned in the thread (had invested in bulk 3 years back initially, and added few more just before covid, and then bought from the secondary market later) but I have invested in SGB while keeping in mind the Gold drawdowns, risk of low trade volume of the secondary market, and if gets sold in secondary market, it comes at a cost of a discounted price than the current market price of gold. Because of such risks attached, which all financial instruments have, I was against tagging it ‘the best’ universally. All I had mentioned was to make people aware of the pros and cons of SGB, the risks attached, and then let them make an informed decision.
Well, Silver contracts are available on MCX but I am not a trader. I do have some digital silver on Augment App, the only place I found where you can invest in Digital Silver. I had mentioned the costs attached to investing in digital silver on this thread. One thing about Silver is that its price is more volatile than Gold. And though there are many industrial usages of the metal (unlike Gold), Silver being a natural resource is limited and a significant amount of the metal is not recycled. Also, in some use cases many other metals like Platinum, etc have replaced silver, which was used earlier. So such risks make silver even more volatile in nature.
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can we invest in platinum ?
Tanishq has been selling for a long time. 
Hi @Hum_Sa,
Just like @rupeshmandal said, Tier 2 account of NPS invests in 4 different asset classes, the profit from the same should be taxed under the head capital gains.
Depending upon the holding period it is taxed as long term or short term capital gains.
However, on the transfer between NPS Tiers there is no clarification provided by the authorities on its taxability.
Here’s a read for your reference by the NSDL.
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@Quicko One correction here, Tier 2 has only 3 asset classes - E, C and G. The asset class A is available only in Tier 1.
Refer to the scheme change form for more details. But you don’t have to necessarily do it offline. You can do the same online from your NPS account.
@Hum_Sa Here, I got confused earlier. You are allowed to have different PFMs and investment options under Tier-1 and Tier-2 account. However, you have to stick to one PFM for the chosen investment option. You cannot have one PFM managing your E component while another managing your C or G investments.
Apart from the above, there are some changes in the guidelines for the deposit of NPS contribution by PFRDA:
From 1st Sept 2020 onwards Corporates cannot deposit the NPS contribution themselves and it should be routed through POP only. From 01/09/2020 onwards Rs. 2/- will be deducted from contribution every month as POP Charges.
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@Hum_Sa, I found a very good youtube channel specifically for NPS. I have subscribed to it. I remembered we had a discussion about NPS so sharing it with you too.
Thanks @rupeshmandal.
@Bhuvan, @rupeshmandal - A tricky Question:
Hi, I invested in Tier 2 G Scheme of LIC in Jan 2021 and now see that I am making a loss of 14%!!! How does this happen? I was under the impression that LIC G scheme is invested mostly in RBI long term bonds with 7-10% returns. Then why is it showing negative return? Does the NAV fluctuate so much if YES. How to decide when to buy the G Scheme Units?
PS: I understand the below note:
NPS Scheme G Returns:
Scheme G of NPS invests in government bonds and related securities. It is a low-risk investment option. Double-digit returns in the past one year has been luring naive investors to invest in such schemes without understanding the rationale. TO understand how NPS delivered superior returns, one needs to know that bond yields and prices of the bonds have an indirect relationship. When yields move down, prices of existing debt schemes go up leading to these securities becoming more favourable due to higher interest rates.
This means that the NAV of the debt scheme goes up when the yields of securities go down and vice versa. This explains the double-digit returns in the Scheme G of NPS in the last one year. As per the data shared, the benchmark 10-year G-Sec yields have gone down from 6.70% to 5.94% which favoured the government scheme portfolio of NPS and so Scheme G of NPS delivered an average return of 12% in the last one year.
One can comment on this only after reviewing the underlying assets and what changed after you invested.
I always recommend keeping a check on the underlying assets of the schemes. http://www.npstrust.org.in/content/scheme-portfolio (updated on monthly basis)
Have a look at the scheme details, maybe you would find your answer.
As a thumb rule, always check the underlying assets before investing, changing scheme, and also keeping in mind other factors like interest risks and credit risks etc.
Looks like you’re new to debt funds. Gilt funds don’t have credit risk, but they carry interest rate risk. Longer the maturity of a bond, higher the interest rate risk. In the last few month yield have risen quite a bit and that means the NAVs fall.
Would suggest you start here
https://zerodha.com/varsity/chapter/how-to-analyze-a-debt-mutual-fund/
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