REC Bonds and it's benefits
This article is to those who are looking for safer bulk FD Investments with more ROI, return on Interest and less tax debited from them for the Interest they gain.
In India many people try generating more income and we also have a intention to open door for savings when compared with other countries. That too most people after their retirement tend to put money in bank in the form of Fixed Deposits to get fixed incomes
Why bonds from firms when bank offers Fixed Deposits?
Bond is a good kind of Investment
Let me explain you practically.
In case if your salary is 10lakh per annum, then you will be covered under tax slab of 30%
Let us assume that your FD interest from bank is 1 Lakh per month, then they will be deducting tax around rupees 30k from you.
In this scenario bonds play a vital role.
REC- Rural Electrification Corporation
In India many people try generating more income and we also have a intention to open door for savings when compared with other countries. That too most people after their retirement tend to put money in bank in the form of Fixed Deposits to get fixed incomes
Why bonds from firms when bank offers Fixed Deposits?
Bond is a good kind of Investment
Let me explain you practically.
In case if your salary is 10lakh per annum, then you will be covered under tax slab of 30%
Let us assume that your FD interest from bank is 1 Lakh per month, then they will be deducting tax around rupees 30k from you.
In this scenario bonds play a vital role.
REC- “A hidden Treasure”
REC- “Best in Bonds”
REC releases bond schemes and with the help of this fund raising plan, they utilize the collected money in a proper way and help to attain maximum profit for the firm and good Interest returns for it's Investors.
But in general people used to say that they are providing only 5.37% of interest. But this is not the actual fact for the one who invests more money. Let me explain you in detail.
Pic courtesy:Economic Times
Tax free bonds are the ones where you are being taxed only for the interest that you get and not for the invested capital.
Say for example you are investing 50 lakhs in tax free bonds where you will get 9.91% of annualized returns. Here is the calculation shown below
- Invested amount : 50,00,000
- Savingtax@20.8%: 10,40,000
- Interest earned in first year at 5.75%pa as per bond is : 2,87,500
- Second year 5.75% : 2.87,500
- Third year 5.75% : 2,87,500
- Fourth year 5.75%: 2,87,500
- Fifth year 5.75%: 2,87,500
- Total benefit : 24,77,500
- Return in 5 years is 49.55% including 20.8% which has been saved by showing it in tax
- Annualized return is 9.91%
Courtesy: economic times
LIC is holding 7.09% of REC
REC revenue will get increased because of
- Central government focus on improving rural electrification
- UDAY - Ujwal Discom Assurance Yojana, by central government has been marked improvement in financials of stressed power distribution companies in the country.
REC share price
Pic Courtesy: moneycontrol
Shares of REC down nearly to 15% last week
Central government firm tries to raise funds through two forms
*Bonds or debentures
*Disinvestment
On 4th of July 2019, REC made a proposal to raise funds upto 75,000 Crore of money from bonds. This will be done with approval from it's share holders.
Thanks
Sudharsun
https://www.nseindia.com/live_market/dynaContent/live_watch/equities_stock_watch.htm?cat=SEC.
ReplyDeleteIn the above link L&T finance is maturing on 17th sep 2019. if they wait for till maturity(hardly 24 days), they will get their interest , why still they are selling. If a person buys now how much he will get.
I am not sure whether my understanding is correct or not. Please correct me if i am wrong. If u observe the volume traded(3234), which is good for bond tradings. Let us assume i have bought the 1 bond at LTP(1041.11) & i will wait till the bond maturity which is sep 17th 2019. Here i am also assuming the interest is paid annually . so according to bond coupon rate 10.24%, i will get (1000 + 102.4) = 1102.4. so i am getting profit of around 60.