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fiancial Investment in Surat

Fixed Income Products

A type of investing or budgeting style for which real return rates or periodic income is received at regular intervals at reasonably predictable levels. Fixed-income budgets and investors are often one and the same - typically retired individuals who rely on their investments to provide a regular, stable income stream. This demographic tends to invest heavily in fixed-income investments because of the reliable returns they offer. Government Securities, Corporate Bond, Company Deposits, Inflation-indexed Bonds, Infrastructure Bonds etc. are various fixed income products.

Government Securities

Government securities (G-secs) are issued by the RBI on behalf of the government. G-secs represent the borrowing of the government, mostly to meet the deficit. Deficit is the gap between the government's income and expenditure. G-secs are issued through auctions that are announced by RBI from time to time. G-secs are benchmark securities in the bond market, and tend to offer a lower interest rate compared to other borrowers for the same tenor. This is because there is no credit risk or risk of default in a G-sec.

Corporate Bond

Corporate bonds are debt instruments issued by private and public sector companies. They are issued for tenors ranging from 2 years to 15 years. The more popular tenors are 5-year and 7-year bonds. Most corporate bonds are issued to institutional investors such as mutual funds, insurance companies, and provident funds through private placement.

Company Deposits

Company Deposit is an interest bearing investment option; offered by the Bank and Non-Banking Financial Companies (NBFC`s), which earns a fixed rate of return over a period of time. However the return is usually higher than the Bank`s FD, because of its involving higher risk than Bank Deposits (i.e. the investor cannot sell the documents to recover his invested amount even if the company defaults as there are no assets backing them up).

Inflation Indexed Bonds

Inflation-indexed bonds (IIBs) are debt market securities offered by the government and even some corporations like L&T, with a view to protect your savings from *inflation. This is done so by linking the returns to the rise in prices.
Inflation component on principal will not be paid with interest but the same would be adjusted in the principal by multiplying principal with index ratio (IR). Interest rate is paid as per the fixed coupon rate on principal adjusted against inflation.

Inflation component on principal will not be paid with interest but the same would be adjusted in the principal by multiplying principal with index ratio (IR). Interest rate is paid as per the fixed coupon rate on principal adjusted against inflation.


(*‘Inflation’ is a general increase in prices and fall in the purchasing value of money).

Infrastructure Bonds

The government announces from time to time, a list of infrastructure bonds, investment in which is eligible for deduction under Section 80C of the Income tax Act. Bonds issued by financial institutions like the Industrial Development Bank of India (IDBI), India Infrastructure Finance Company Ltd. (IIFCL) and National Bank for Agriculture and Rural Development (NABARD) are eligible for such deduction. The bonds are structured and issued by these institutions as interest paying bonds, zero coupon bonds or any other structure they prefer. Infrastructure bonds are compulsorily credit rated, and can be issued in the demat form. Interest from these bonds is taxable. Infrastructure bonds do not carry any government guarantee.