How to Buy Government Bonds in India?

Hey Zeenat,

I love to invest in government bonds because I admit, I am a person with

a low-risk appetite and prefer a secure, risk-free investment that offers fixed and guaranteed returns. And government bonds do exactly that. But before you dwell on understanding how to buy government bonds in India, you must know why you should buy government bonds.

• Government bonds are risk-free.

• They offer good and long term returns.

• There is trouble-free liquidity since banks and financial institutions participate in this.

• Has a diversified portfolio.

• They also offer good tax benefits.

Now that you know why you should invest in government bonds, let’s understand how to buy government bonds online in India.

You can easily buy government bonds through a mobile app or a web-based app which is named as NSE goBID of the NSE or the National Stock Exchange. These bonds are issued by the Reserve Bank of India so they are completely safe to invest in. 

There are two other ways through which investors can buy Government Bonds:

1. GILT Mutual Funds: Government Securities Mutual Funds, or GILT, are the most typical way to buy them. You must pay an expense ratio when you invest in mutual funds, which affects your return. Mutual funds allow you to diversify your assets.

2. Direct Investment: You will require a Trading and Demat Account with the bank if you do not wish to invest in Mutual Funds and instead want to invest directly in Bonds. You can register for the bids on the stock exchange. There's no need to hunt for a stockbroker in this town. You can place an order on the exchange to purchase Bonds and then hold them in a Demat Accounts.

The lowest risk is the major benefit of investing in government bonds. Although there is no chance of default, the interest rate may fluctuate. The longer the duration of a bond, the more sensitive it is to interest rate changes. 

I hope my response gave you a clear understanding on how to buy government bonds in India.