[SmartCat]

Originally Posted by GTsunny

Are there any free or paid websites and / or apps that provide YTM for all NCDs traded in Indian market thanks, used to access trackbonds.com, this website seems to be shut for a long while now, this website gave YTM and current traded prices for some but not all NCDs traded in market.

Just type "Yield to Maturity calculator" in Google. Eg:
https://goodcalculators.com/bond-yie...ty-calculator/

Or you could buy bonds using www.goldenpi.com platform (funded by Zerodha). It shows the yield to maturity % of the listed bonds:

[DigitalOne]

I am not seeing the option to apply for the PFC NCD 2021 in ICICIDirect. It opened on 15th Jan. Have they already closed the applications due to oversubscription??

[pradkumar]

Why RBI is Doing Dhishum Dhishum With Bond Market

Brilliantly explained!

https://vivekkaul.com/2021/02/24/why...h-bond-market/

[SmartCat]

Came across this new debt product called "Covered Bonds".

- Backed by collateral (Eg: Gold, vehicles etc).
- Returns much greater than fixed deposits
- Minimum investment Rs. 10,000
- Interest is paid out monthly
- For tax purposes, it is treated by equity. Hold this bond for more than 1 year, and only 10% LTCG applies
- Website "Wint Wealth" is backed by Zerodha, CRED etc

Currently, this website offers "vehicle loans" bond offering 10.25% pa returns. The bond has been rated AA by CARE Ratings. The loan book size is Rs. 20 cr, but vehicle collateral value is Rs. 32 cr.
https://www.wintwealth.com/app/asset...heels-Mar21-3/



Note that the bond is offered by an NBFC called "Kogta Financial" (backed by Axis MF, Morgan Stanley & IIFL). Wint Wealth just facilitates the transaction.

[concorde24]

Hi All,
I am looking for identifying key funds for Debt portfolio (50%). I have already invested in PPF and FD, and planning to move my FD to Debt for taxation benefits (Slab rate vs 20% with indexation). This is for my long term goals (15+).

Now, I was looking into Gilt funds assuming it will be beneficial in long run if I can withstand the short term drop in NAV due to possible interest rate increase. But while looking at the IDFC debt fund prospectus it mentions Core-Satellite investing and it groups Gilt as Satellite fund and not to put all the long term savings there.

Now, I wanted to clarify what will be good % to allocate at maximum and what will be good categories to invest in core debt portfolio for long term.

Thanks

[SmartCat]

Originally Posted by concorde24

This is for my long term goals (15+).Now, I wanted to clarify what will be good % to allocate at maximum and what will be good categories to invest in core debt portfolio for long term.

50% to (debt funds + FD + PPF) and 50% to (stocks + equity funds) is a simple long term allocation. Within debt funds, allocate 1/3rd each towards overnight or liquid funds (short duration), Banking & PSU funds (medium duration) and Gilt funds (long term).

List of each category of funds:
https://www.valueresearchonline.com/...uspended-plans
https://www.valueresearchonline.com/...uspended-plans
https://www.valueresearchonline.com/...uspended-plans

Choose funds with long history, 3 to 5 star rated, funds with large assets and fund houses with good reputation (avoid lesser known names)

[eyesice]

Originally Posted by SmartCat

50% to (debt funds + FD + PPF) and 50% to (stocks + equity funds) is a simple long term allocation. Within debt funds, allocate 1/3rd each towards overnight or liquid funds (short duration), Banking & PSU funds (medium duration) and Gilt funds (long term).

List of each category of funds:
https://www.valueresearchonline.com/...uspended-plans
https://www.valueresearchonline.com/...uspended-plans
https://www.valueresearchonline.com/...uspended-plans

Choose funds with long history, 3 to 5 star rated, funds with large assets and fund houses with good reputation (avoid lesser known names)

I recently sold a property and would like to invest the proceeds for retirement.

I was planning to invest 30% of funds in debt instruments - I was more inclined towards RBI Floating Bonds that offers ROI of NSC + 35 bps.

The rest of the 70% - I was planning to invest in Equity MFs via SIP over a period of say 18 - 24 months to allow Rupee Cost Averaging to kick in.

Do you think this is a good strategy to invest? Or should I consider investing in debt funds as suggested from your post above?

[SmartCat]

Originally Posted by eyesice

I recently sold a property and would like to invest the proceeds for retirement.

Have you fully utilized Section 54EC deduction to avoid paying long term capital gains on property sold?
https://www.icicidirect.com/mailimag...ain-bonds.html

I was planning to invest 30% of funds in debt instruments - I was more inclined towards RBI Floating Bonds that offers ROI of NSC + 35 bps.

RBI Floating Rate Bonds is a good idea. If you are over 60, you can consider investing in LIC Pension scheme too, that offers 7.4% pa, payable monthly.
https://licindia.in/Products/Pension...andana-Yojana1
Subscribing to this particular scheme is 100% online (no need to interact with a pushy salesman) but the online process is still a huge pain!

However, if you want liquidity, debt funds is the best. You can withdraw funds anytime.

The rest of the 70% - I was planning to invest in Equity MFs via SIP over a period of say 18 - 24 months to allow Rupee Cost Averaging to kick in.

Investing over a period of 2 years is a good idea. I prefer a maximum equity allocation of 50%.

[eyesice]

Have you fully utilized Section 54EC deduction to avoid paying long term capital gains on property sold?
https://www.icicidirect.com/mailimag...ain-bonds.html

Actually the gains are pretty minimal. Hence I am not fully inclined toward availing Section 54EC.

If you are over 60, you can consider investing in LIC Pension scheme too, that offers 7.4% pa, payable monthly.
https://licindia.in/Products/Pension...andana-Yojana1
Subscribing to this particular scheme is 100% online (no need to interact with a pushy salesman) but the online process is still a huge pain!

I am inching up towards my mid thirties. So this is not applicable for me I guess.

However, if you want liquidity, debt funds is the best. You can withdraw funds anytime.

Actually your posts in this thread has been an eye opener for me. Thanks for that. I have been invested in equity market for quite some time now but I have never been able to grapple onto the idea of debt instruments (funds and bonds alike).

Most of the debt funds seem to have a very low YTM (even Gilt funds are offering 5.x% with an avg maturity of 6 years). Do you think its better to invest in debt funds v/s RBI Floating Rate bonds? Liquidity is not my primary concern at this point.

Thanks again for this wonderful thread!

[SmartCat]

Originally Posted by eyesice

Most of the debt funds seem to have a very low YTM (even Gilt funds are offering 5.x% with an avg maturity of 6 years).

True. Most of the juice has already been extracted I think.

Do you think its better to invest in debt funds v/s RBI Floating Rate bonds? Liquidity is not my primary concern at this point.

If liquidity is not a concern, I think RBI floating rate bonds is the best option for you in the current environment (where interest rates are expected to go up).

By the way, there is a separate category of mutual funds called DEBT FLOATER, which is supposed to invest in floating rate bonds
https://www.valueresearchonline.com/.../debt-floater/

However, it does not work as advertised because raising funds at floating rates is not popular among banks, financial institutions and corporates. So despite the name, the funds in the category invest in regular fixed rate bonds and hence act as a regular corporate bond fund.

[concorde24]

Originally Posted by SmartCat

If liquidity is not a concern, I think RBI floating rate bonds is the best option for you in the current environment (where interest rates are expected to go up).

Thank you SmartCat for the point on Liquidity.

The other issue of RBI bonds is taxation of interest as well - In RBI floating bonds, since interest is directly paid, it is at Tax slab (+surcharge for higher income guys). In case of Debt MF, it will work out much better with indexation after 7 years in equivalent hold period.

I was tempted to go for RBI floating rate bonds, but the effective yield after IT is what stopping me. I am presently finalizing a mix of Short term debt, Banking & PSU and Gilt.

[graaja]

Originally Posted by concorde24

The other issue of RBI bonds is taxation of interest as well - In RBI floating bonds, since interest is directly paid, it is at Tax slab (+surcharge for higher income guys). In case of Debt MF, it will work out much better with indexation after 7 years in equivalent hold period.

Even I was tempted to invest in RBI bonds as they have a decent (compared to what the debt funds are returning of late) 7.15% returns. But as you pointed out, for people who are still earning and are in the highest tax slab, the post tax yield will be less than 5%. I think this is best suited for post retirement investment.

[eyesice]

I was tempted to go for RBI floating rate bonds, but the effective yield after IT is what stopping me. I am presently finalizing a mix of Short term debt, Banking & PSU and Gilt.

Even I was tempted to invest in RBI bonds as they have a decent (compared to what the debt funds are returning of late) 7.15% returns. But as you pointed out, for people who are still earning and are in the highest tax slab, the post tax yield will be less than 5%. I think this is best suited for post retirement investment.

Thanks for pointing the taxation part. Even with 30% tax, RBI Bonds would earn 5%. And it is a floating interest rate bond as we are at the bottom of the Repo Rate cycle I would assume.

If possible, can you share the list of debt funds that you are invested in?

[graaja]

Originally Posted by eyesice

If possible, can you share the list of debt funds that you are invested in?

My debt fund investments are spread between the below funds, 80% of the debt portfolio is between gilt and banking & psu, 20% in liquid.

1. Axis banking and PSU
2. Nippon banking and PSU
3. IDFC government securities fund
4. Nippon gilt fund
5. SBI gilt fund
6. Nippon liquid fund

Over a period of 5 years, these can yield 8% returns (based on historical data). The last few months have been really bad though.

[eyesice]

Thank you for sharing.

Over a period of 5 years, these can yield 8% returns (based on historical data). The last few months have been really bad though.

Does it make sense to invest in lumpsum or SIP in these funds? Smartcat has earlier explained that the YTM is always constant if held to maturity. Right now, the yields are very less (event GILT funds offering 5.x % pretax). So will investing via SIP over a period of say 12 months have an impact on the overall yield of investment?