When currently interest rate is very low - do you think its the right time to buy either Gsec directly or via gilt fund?
I think rates will go up …from here …and we can loose on capital ?
@curiousvi if you buy directly the gsec, you are sure what u are getting and if interest rate rises, your ytm is same. Tax disadvantage is there.
If you buy gilt fund, interest rate risk is there.
If you believe that interest rate is going to rise, you can also invest in short duration gsec but it will have a lesser ytm.
What’s your take on all this. What r u planning to buy and what r ur reasons. Reply if you are ok to share
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You can pledge SGB as cash component. Even by conservative estimate, over long run gold will give ~4%(tax free) +2.5% from govt. Your overall post tax returns will be much better than any debt funds.
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exactly !! I dont know why even many experienced traders always miss SGBs , such a great tool especially FNO .
Acts as a cash component ,
acts as natural hedge against the stock market
gives stable 2.5% interest + Gold return + Best possible tax options
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Hedge is not needed as F&O by itself was designed to act like a hedge against the equity markets.
Also SGB aint that liquid , you cannot park your emergency funds in it whereas I can park my emergency funds into liquid/overnight/money market funds …pledge it and then unpledge it during emergency , can withdraw within 3 days.
@Sai_Krishnan who said it is not that liquid ? ALL SGBs trade like a stock and you can enter exit , pledge un pledge just like stock.
you can easily trade and no need to wait 3 days like any other funds + no exit loads + no entry load + no charges .
the best of liquid fund liquid bees , you cannot convert accumilated units if its in decimals , so basically devised for ultra/super HNIs
for a retail trader who wants to park like 5-10 lakhs you will always end up in decimals accumilated interest and needs to left out till it becomes 1 .
In my view SGBs are the best liquid fund till date in india .
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You seem to be knowledgable on this and i have few questions if you can answer.
I know the sgb are liquid, it’s the tax treatment different for the ones you buy from the market compared to the ones issued by gov?
Also, is the 2.5% div applicable on these traded sgb as well? I think it should. Just want to confirm.
Also you mentioned no entry/exit loads. Does zerodha charge any brokerage for these instruments when you buy it in the open market?
Thanks in advance.
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Tax treatment is the same even if you buy from secondary market.
Yes you will get 2.5% interest.
Zero Brokergae
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- Tax is similar , whether you buy from primary or secondary , Interest on the Bonds will be taxable as per the provisions of the Income-tax
Difference comes when you are selling when you sell to RBI directly . The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.
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Yes 2.5% applicable on secondary market trades as well & 2.5% calculated on the issued price and not on the LTP . example if SGB Jul issued at 4750 , 2.5% calculated on 4750 not on the LTP of 4600.
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zero brokerage .
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I am going with this.