\u00a0These bonds may be mortgaged or pledged to avail the loans after the lock in period.<\/div>\n<\/li>\n<\/ol>\n
<\/h3>\nQ & A Session:<\/h2>\n
This IFCI Infra Bond has 2 options – one with buyback which gives 7.85% interest while the other without buy back which gives 7.95% returns. Which option should I subscribe?<\/p>\n
In case of buyback option IFCI is offering interest rate of 7.85% and after 5 years you have option to sell it back to IFCI while in the case of without buyback you get interest rate of 7.95% but you need to hold the same for 10 years. So if you calculate as in the case above your annual return on investment would be 14.54% in buyback option (provided you exit the bond at the end of 5 years) while 10.67% for non buyback option (if held for 10 years). The other thing is after 5 years you might exit in the secondary market by selling it in exchanges but I am not sure how liquid would the markets be for these bonds. So if you ask me what I am subscribing to – I would go for buyback option!<\/p>\n
I don\u2019t have Rs 20000 with me right now. Is this the only opportunity for investing in Infrastructure bonds or I would get some other options going forward?<\/p>\n
Infrastructure Finance Companies like LIC, IDFC, IFCI and other NBFCs which are classified as Infrastructure Finance Companies by RBI are allowed to issue these long term infrastructure bonds. These bonds are good source of cheap finance for these companies. So going forward I think we would get more such bond offers. But be careful and look out on blogs and financial newspapers for these new subscription offers. Some newspaper reported that LIC would be coming out with Infrastructure bond pretty soon.<\/p>\n
Also some reports suggest that in next few months you might get better interest rates.<\/p>\n
I got an email asking about what should he choose Cumulative or non-cumulative option?<\/p>\n
For cumulative option you get interest at the end of bond maturity and also this is true compounding i.e. you get interest on interest but in case of non cumulative you would get interest every year directly to your bank account. I would advise to go for cumulative option.<\/p>\n
To Conclude<\/h2>\n
To start with a pre tax return of 7.85% doesn’t seem very attractive in these high inflation days but once you change your perspective and look through the opportunity cost window the return in the highest tax bracket turns out to be around 14.5% which seems to be excellent considering this is an assured return and almost risk free kind of tax saving investment. Also for 20% bracket the return turns out to be around 11.95% while 9.75% for people in 10% tax bracket which seems to be decent.<\/p>\n
I suggest everyone in the higher tax bracket to subscribe to the Infrastructure bonds. You may subscribe to this IFCI bond or wait for other institutions to issue these kinds of bonds. But by the end of this financial year you must opt to save tax on additional Rs 20,000!<\/p>\n
[button link=”http:\/\/www.ifciltd.com\/IFCIBonds\/InfrastructureBonds\/Issue201011\/tabid\/212\/Default.aspx” color=”#AAAAAA” size=”3″ style=”3″ dark=”0″ square=”0″ target=”blank”]Click to download IFCI Infrastructure Bond Prospectus[\/button]<\/p>\n","protected":false},"excerpt":{"rendered":"
I love to save Taxes and so do most people. And if you remember Finance Minister\u2019s announcement in recent budget gave an opportunity to save taxes on additional Rs 20,000 by investing in Infrastructure bonds. In keeping with this IFCI has launched the first infrastructure bond recently. 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And if you remember Finance Minister\u2019s announcement in recent budget gave an opportunity to save taxes on additional Rs 20,000 by investing in Infrastructure bonds. In keeping with this IFCI has launched the first infrastructure bond recently. The subscription is open till 31st August 2010…","_links":{"self":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/104"}],"collection":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/comments?post=104"}],"version-history":[{"count":0,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/104\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media\/106"}],"wp:attachment":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media?parent=104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/categories?post=104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/tags?post=104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}