difference between:
fixed maturity plans
vs
Fixed Deposit
vs
NCDs
vs
Mutual Fund (roll down maturity)
Vs.
#BharatBond ETF
👇
taxation (1/3):
Fixed Deposits & NCDs are the worst placed. For both bank FDs and NCDs, the interest earned during the year is to be accrued and is taxable at Marginal Rate of taxation of the holder.
suitable for investors in NIL or low tax bracket.
taxation (2/3):
Fixed Maturity Plans & Debt Mutual Funds (assuming t>3 years)
The applicable taxation rate in this case is 20% with indexation. can also be timed for extra indexation.
taxation (3/3)
ETF tracking Nifty BHARAT Bond Index
taxation is same as debt mutual funds.
Liquidity (1/2):
Mutual Funds/FD/#bharatbond
have high degree of liquidity available.
Fixed Maturity Plans
units are listed, but almost zero trades, one has to arrange a buyer offline before executing a trade online.
Liquidity (2/2)
NCDs
depends on the size & rating of issuer.
in case of any negative news going around the issuer, liquidity may or may not be available.
sometimes liquidity is available only at deep discounts.
Credit Risk (1/2):
Fixed Deposit
leading private sector bank = very very low
cooperative bank = very high
small finance bank = low
NCDs
varies as per issuer. can vary from very small to acutely high
FMPs
depends on the underlying portfolio. going by the recent events, HIGH.
Credit Risk (2/2):
#BharatBond
as all the underlyings are either
Central Public Sector Enterprises (CPSEs)
Maharatna
Navratna
Miniratna
PFIs
Statutory body.
very low credit risk.
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