Are you a player in the stock market? Or are you someone who plays it safe and invests in mutual funds or fixed deposits? Though agree that it is better to be safe than sorry, but risk-taking is essential in today's era.
Let's take a sneak peek into the government bonds or securities.
Sounds exciting and confusing. Yes, not only industrialist or banks can invest in government securities, but as small term investors, every individual can also make an investment. Exciting... Let us see how?
Before we get into the details, ask yourself as to what you are looking out for either short or long-term investment?
It is necessary to have a Demat account if you want to invest in shares. Demat accounts are accounts whereby all trading stocks and mutual funds take place.
Hearing stock market might scare you, but don't worry, government stocks or bonds are generally not available at the stock market. They are purely available with all the leading banks and post offices.
For making an investment, you simply would have to visit the nearby branch with all the necessary documents for filling up the application form. To process your request, a minimum time period would be required, after which you will receive a bond certificate in your name.
Sounds simple right. Let's get into the details as to who is registered and how the process works?
As said earlier, small-time investors like us were not allowed to deal in government securities, but all thanks to the RBI. RBI has introduced a scheme known as a Negotiated dealing system - order matching (NDS-OM)platform.
All banks and primary dealers (PD) of government securities are existing members of the RBI Scheme NDS-OM, and we as individual investors too can buy and sell bonds through them.
Please Note: The government securities are held in terms of subsidiary general ledger (SGL) accounts. Once the banks or PDs execute the order, the government would clear the order and will convert the SGL to the accounts demat form and transfers the funds to the demat account itself.
The advantage of buying this scheme is that since other dealers are not registered under NDS-OM, they cannot trade on your behalf.
Another advantage is for long-term investors and specifically for retired people. Senior Citizens who invest for long-term say for 20 to 30 years get a direct 8% interest on their invested money, which is way higher than most debt instruments.
Apart from saving, one can also get tax benefits by investing in government securities.
Since the market is volatile, people looking for a safe form of a transaction can start investing in mutual funds.
Before investing research and read every minute details about G-Securities.