What are the advantages of investing in Government Securities? are there any at all?

Yes. Let us look at some of them:

1. No TDS – immaterial of amount there is no TDS / no witholding tax on the principal. Very useful if you are a big company but have no tax liability because of brought forward losses

2. zero risk of default.

3. extremely liquid – especially in the 10 year paper market

4. Regular income product – twice a year, attractive returns normally

5. Loans available against it / accepted by all for security deposit.

6. Can be held in demat form

7. Frankly only place to invest with a 20 year view – there can be no AAA paper with a 20 year duration!

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  1. Mani,

    Thanks for the article. Could you please let us know how one goes about investing in Govt. securities? Are they available for retail investors other than through Mutual funds? Thanks!


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