T-Bills: Merits & Demerits

T-Bills: Merits & Demerits

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Benefits of Treasury Bills

1. Zero Danger: It is thought to carry very little risk or none at all. You will most likely receive your money back along with the promised interest.

2. Effectively Convertible: They flow easily and can be exchanged for cash with ease. Even before the entire period has expired, you always have the option of receiving your money. Be that as it may, this isn't exhorted except if you are in outrageous monetary need. Please be aware that if you sell your T'Bills before the deadline to get your money, you won't get the full amount promised. In other words, the investment will be discounted.

3. No fees for transactions: There is no fee for the transaction. When you buy T'Bills for yourself, brokers don't charge you a fee, unlike with other types of investments, where the dealer who handles the transaction does.

The Negatives of Treasury Bills

1. T-Bills are instruments with no coupon that are sold at a discount; Consequently, their returns are lower than those of other assets in the stock market. Compared to investments in the stock market, which are affected by market conditions and other factors, the yield on Treasury Bills is significantly lower. As a result, returns remain constant throughout the tenure despite fluctuations in the business cycle and economy.

2. The investor's income bracket determines the short-term capital gains (STCG) tax on gains from Treasury bills.

How do I buy Indian Treasury bills? - In India, you typically need to work with a bank or broker that is allowed to participate in the T-bill auction process to buy Treasury Bills. To hold the T-Bills, you would need a trading platform, a Demat account, and a trading account. In the primary market, where the government makes money by selling T-Bills to investors, T-Bills can be purchased. The RBI manages the auction on behalf of the Indian government. The government's press releases about the T-bill auction can be found on the Reserve Bank of India's website. The secondary market pricing is influenced by the market's supply and demand for T-Bills. Consult a financial advisor before making an investment in T-Bills because the interest rate and maturity date are subject to change and may not be suitable for all investors.

T-Bills: Why to buy Them? - T-Bills are one of the safe ways to invest in our country. Investors with extra cash who want to put it to good use and earn high returns will find this instrument to be ideal. Individuals who wish to protect their asset possessions in government speculation instruments ought to put resources into T-Bills to decrease the risk to their general riches. Additionally, it encourages portfolio diversity.