Last Updated on October 13, 2020 at 9:46 am
Govt of India (GOI) has announced the sale (Re-issue) of 7.16% Government bonds maturing in 2050. Approximately Rs. 400 crores of these can be bid by retail investors via the NSEgoBid platform on 13th and 14th Oct 2020 (10 am to 5 pm). The auction will be conducted by the RBI on 16th Oct.
Details of the 7.16% GOI Bond: 716GS2050L – GS (7.16% GS 2050). Price per Security Rs. 115.00. Min Bid & Multiples Rs. 10,000.00 and Max Bid 2.00 Crores. This bond was issued 20-Apr-2020 and will mature on 20-Sep-2050. Interest will be paid twice a year in Oct and April.
What investors should consider before buying: These are GOI bonds and not “RBI bonds”. Cumulative payout is not possible. You will get an interest rate of 7.16% (before tax). However since each bond is being sold at a premium of Rs. 15, the effective yield (approx) is (7.16%/115) = 6.22%. Investors considering this bond versus an annuity must ask (among other questions) if this effective yield is a better deal. For example, if you are 40+, want a pension for life, LIC will be happy to pay you more than 6.22% (higher, the age, higher the rate) but will keep the principal.
If you want the principal returned to the nominee on death LIC Jeevan Akshay-VII will offer a lower rate (age-dependent) of 5.3% to 5.6%. Interest from both GOI bonds and insurance products are taxable as per slab. These bonds will pay interest for 30 years (may or may not a person’s lifetime), will always return the principal and there is no need for a life certificate to provided each year. As with every choice, it is not about which is better, it is about which is better for us.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! 🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
What investors should know before buying: NSEgoBid is a buying-only platform. You can attempt to sell these only via a depository participant who is also an NSE trading member. Therefore please find out more about this form your Demat provider before buying. Kindly consult a SEBI registered fee-only advisor if you need advice.
This is a 30-year bond. So it should only be used if you want regular income over that period. Make sure you have a nominee for the demat account and suitable will. In general, it is better to assume that once purchased it would be hard to sell these bonds as retail participation would be less. So do not buy unless you intend to hold until death and transmission thereafter.
We had discussed more who should use these bonds before: Can I get a pension using GOI bonds instead of LIC pension? If you want regular monthly income with not much of funds invested elsewhere then these bond are unsuitable for you.
Caveats: (1) you may bid but not get allotment; (2) future auctions may be (or may not be) for bonds that provide higher/lower interest rate: see list of outstanding GOI bonds
Other securities available for bidding bet Oct 13th and 14th 2020:
- 522GS2025G – GS (5.22% GS 2025
- 619GS2034H – GS (6.19% GS 2034)
Useful links for further study
- Government Securities Market A Primer by RBI
- Non-competitive Bidding Facility for Dated Securities and Treasury Bills of the Government of India
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
![Follow Freefincal on Google News Follow Freefincal on Google News](https://freefincal.com/wp-content/uploads/2023/07/Follow-Freefincal-on-Google-News.jpg)
![Subscribe to the freefincal Youtube Channel Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.](https://freefincal.com/wp-content/uploads/2023/07/Subscribe-to-the-freefincal-Youtube-Channel.jpg)
![Follow freefincal on WhatsApp Channel Follow freefincal on WhatsApp Channel](https://freefincal.com/wp-content/uploads/2023/09/Follow-freefincal-on-WhatsApp-Channel-300x83.jpg)
![Listen to the Lets Get Rich with Pattu Podcast Listen to the Lets Get Rich with Pattu Podcast](https://freefincal.com/wp-content/uploads/2023/07/Listen-to-the-Lets-Get-Rich-with-Pattu-Podcast.jpg)
![Lets Get RICH With PATTU podcast on YouTube Lets Get RICH With PATTU podcast on YouTube](https://freefincal.com/wp-content/uploads/2023/08/Lets-Get-RICH-With-PATTU-podcast-on-YouTube-644x362.jpg)
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
About The Author
![Pattabiraman editor freefincal](https://freefincal.com/wp-content/uploads/2019/11/Pattabiraman-author-freefincal-article-bottom.jpg)
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
![Both boy and girl version covers of Chinchu gets a superpower](https://freefincal.com/wp-content/uploads/2021/02/Article-bottom-Chinchu-gets-a-superpower-front-cover-for-girls-and-boys.jpg)
![Feedback from a young reader after reading Chinchu gets a Superpower (small version)](https://freefincal.com/wp-content/uploads/2021/02/For-bottom-Feedback-from-a-young-reader-after-reading-Chinchu-gets-a-superpower.jpg)
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
![You can be rich too with goal based investing](https://freefincal.com/wp-content/uploads/2016/11/You-can-be-rich-243x300.jpg)
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
![Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want](https://freefincal.com/wp-content/uploads/2017/05/2-mini-Cover-pink.jpg)
Your Ultimate Guide to Travel
![Travel-Training-Kit-Cover-new](https://freefincal.com/wp-content/uploads/2019/11/Travel-Training-Kit-Cover-new.jpg)