So tax-free infrastructure bonds for infra projects will be issued. Assuming they would be similar in nature (payouts will be tax-free) to the ones issued earlier, look before you leap.
For those far away from retirement: Why would you want to invest in a product that offers no compounding?
If I have access to a lump sum, I would be better off investing in a productive asset like equity.
What if I invest in a tax-free bond and invest the tax-free payouts in equity? That is like trying to rub your nose with your tongue, when your hands are free? Anyway, if you are interested in this, check this out:
Those not convinced can see: Tax-free Bonds: Do not invest if your retirement is a long way off!
For those close to retirement: Do not lock away most of your money in these bonds even if the coupon rate is a juicy double-digit number. Your expenses might increase higher than that and you need a good amount in growth assets which are liquid.
Yes, a small portion can be used to generate income from these bonds, but it all depends on the interest rate and how liquid your corpus should be.
Perhaps if the rate is good, someone who has a small corpus (inadequate for inflation-proof income) can buy these bonds from a solid company with little debt. Still there is a risk though.
New Delhi Investor Workshop on financial planning and goal-based investing
Register with the screen below or from the registration page
If you have friends or relatives in Delhi who you think could benefit from this workshop, please forward this link to them.
Buy our New Book!You Can Be Rich With Goal-based Investing A book by P V Subramanyam (subramoney.com) & M Pattabiraman. Hard bound. Price: Rs. 399/- and Kindle Rs. 349/-. Read more about the book and pre-order now!