InvestorQ : Are REC government bonds safe to invest?
Purvesh made post

Are REC government bonds safe to invest?

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VIKAS DELIWALA answered.
10 months ago
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INVESTMENT ARE NEVER RISK FREE EVEN IN DEBT INVESTMENT.

BUT, BOND'S AND DEBENTURES ARE BEST FOR LONG TERM STABLE RETURNS .

AND GOVERNMENT BONDS ARE BEST FOR LONG TERM PURPOSE MIGHT PROVIDE TAX BENEFITS AS WELL 👍

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priya Shah answered.
10 months ago
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There is no investment without risk. However, the degree of risk can vary according to the investment type and tenure. Market conditions are one of the most important factors determining the risk in any investment.

What is the REC Government bond?
Rural Electrification Corporation Ltd. (REC) bonds are tax-free bonds issued by government institutions and offer high-grade investment ratings. The tenure of these bonds is generally 10-15 years. Any interest earned on these bonds is exempt from tax.

If you make an investment in bonds the maturity amount (generally principal amount) is guaranteed. However, interest varies according to the nature of bonds whether it is fixed interest bond or variable interest bond. There will, however, not be any tax benefit on the amount of investment made in such bonds. Also, there is no applicability of TDS on interest income. TDS applicability will still be there on the application money while applying for them.

Liquidity is low in tax-free bonds. Usually, they are listed on stock exchanges to provide an exit route to investors. Price and volume may play a spoilsport while off-loading them. 

So, you cannot avoid risk under an investment. What you can do best is to decide your investment target and the risk you are capable of bearing and then select the best suitable investment.
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