Bharat Bond ETF is India’s first and only bond exchange-traded fund (bond ETF). The money is invested in bonds of reputed public sector organizations. Bharat bonds have a fixed maturity date. On this date, you get the invested amount along with the return. You can easily sell units of Bharat Bond ETF on the stock exchange during the fund period. It is an easy and safe investment option to earn money. So through this post we are going to tell you how you can earn money by investing in Bharat Bond and become a millionaire.
What is Bharat bond?
These are passive funds, which invest in the components of the underlying index. These funds are traded at a lower price on the exchange than actively managed debt funds. They track the index and are very transparent. Bharat Bond is a very safe investment option, as it invests in government organizations with an AAA credit rating.
Why invest in Bharat bonds?
- Investing in it offers high security, as money is invested in public sector bonds.
- Stable and tax-efficient returns are available during the maturity period.
- The fund is managed at a very low cost of only 0.0005%.
Should you invest in Bharat Bonds?
You can decide on the following basis whether you should invest in it or not –
- Bharat bonds provide high security, as investments are made in public sector bonds.
- It has daily disclosure of portfolio components and NAVs, which makes it very transparent.
- The expense ratio of Bharat Bond ETF is only 0.0005%, which is very low.
- Bharat Bond gives you a great opportunity to invest in debt at a very affordable price. Along with this it is an ETF, which is quite popular among investors.
- You can allocate the desired asset class at a very low cost. You can invest a minimum of one thousand rupees in Bharat bond.
- There is no charge for redeeming or switching units after 30 days from the date of allocation of the unit.
- There are two versions of the Bharat Bond ETF, which will mature in April 2023 and April 2030.
- Bharat Bond is being managed by Edelweiss AMC, which has also launched ‘Fund of Funds’ for retail investors. The Fund of Funds is similar to a normal mutual fund in terms of liquidity and convenience.
Return in India bond
- Nifty Bharat Bond Index – April 2023, which is short term (3+ years), yielding 6.69% return.
- Nifty Bharat Bond Index – April 2030, which is long term (10+ years), offering 7.58%.
- These are pre-tax returns. You can get a post-tax return of 6.31% in a 3-year ETF and 6.99% in a 10-year ETF. These returns are higher than fixed deposits.
How much risk is there in Bharat Bond ETF?
There are four major risks you may face when investing in fixed income securities, these risks are –
Price Risk It is a maturity risk or a risk when you are not invested until maturity. If you redeem the investment before maturity, there is a risk of value.
Credit risk – Bharat Bond invests in AAA rated government securities. Therefore the default risk or credit risk is very low.
Reinvestment risk The interest received from the fund is reinvested into similar underlying assets. This minimizes reinvestment risk.
liquidity risk – You can buy and sell units on the stock exchange. This means that it has a high degree of liquidity.
Thus we can say that it is very safe.
How to invest in Bharat Bond?
- If you have a demat account, you can invest in Bharat Bond ETF. If you do not have a demat account, you can invest in Bharat Bonds through Fund of Funds. It has an underlying index and maturity like Bharat Bond. The Fund of Funds is a mutual fund, which invests in other mutual funds.
- You can login at bharatbond.in.
- You will have to fill the information of investment amount, investment period 3 or 10 years and method of investment like ETF, Demat account for this and Fund of Funds, Demat account will not be required in it.
- After this, you have to fill PAN, Email ID and Mobile Number and click on Verify My PAN.
- Along with this, KYC details have to be fulfilled to make the investment.
Bharat bonds are taxed just like debt funds. If you remain invested for less than 3 years, the return is added to taxable income and taxed as per the income tax slab. If it is kept for more than 3 years, a 20% tax is levied on the return with indexation benefit.