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What are bonds?

Indian investors have different types of bond investment options available to them, which include government bond, tax-savings bonds, corporate bonds, and investment bonds.

Two types of bonds are available to invest in market, i.e. short term bonds and long term bonds. Bonds are the easiest way for the government and companies to borrow money. Instead of borrowing money from bank at a high interest rate, a company or government can sell bonds to a large group of investors to raise the funds they need for operation or growth.

A bond is a debt security that an investor buys from the government or from a corporate and holds on to it until the date of maturity. On that date, the, bond issuer pays back the interest accrued on the bond in full.

Investment in Bonds

Securities that the Indian government issues, government bonds help the Indian government in financing the government spending. Since government bonds are issued by the Indian government, default in payment is highly unlikely. Therefore, investors in India generally tend to consider government bonds as a highly safe instrument for long-term investment.

However, before investing in government bonds their money in government bonds, investors need to remember the following:

  • Government bonds are a debt instrument.
  • These bonds are issued by the government in home currency. Ones issued in foreign currency are called sovereign bonds.
  • They are issued for a fixed tenure of 10, 20, and 30 years.
  • Government issues them to borrow money from the general public.Therefore, government pays interest to the investors.
  • The name of the government bond issued by India is the ‘India Government Bond 10Y’.

What are corporate bonds?

Debt securities issued by a public or private company incorporated under the Companies Act, corporate bonds help companies in raising money for funding new plant investments, purchasing new equipment, or promoting business growth.

A company issues a corporate bond to investor and in return, promises to repay the whole principal and interest lent by the investor to the company on the date of maturity. During the course of the investment tenure, the company generally pays the interest accrued on the corporate bond investment either semi-annually or annually.

Benefits of investing in corporate bonds:

  • Higher liquidity
  • Widespread options with regards to maturity and investment term
  • Strong credit rating, which leads to highly predictable cash flow, interest and principal repayment, and value of the bond not diminishing over the length of the term.

Know more about the ongoing corporate bonds

How to invest in bonds?

Bond purchases first depend on the value of the bonds being purchased by the investor. If the value of the bonds is Rs 10 lakhs or above, investors need to trade in such bonds in the Wholesale Debt Market (WDM) of the NSE or BSE. Large institutions or HNIs essentially invest in such high-value transactions. These transactions are normally settled either on the same day, which is T+0 or T+1 that is the next day.

Retail investors can invest in corporate bonds by purchasing them online through retail broker using an online broking platform through either the CM (Capital Market) segment on the NSE or the F Group on BSE. It is highly advisable for investors to break up a large lot of bond investments into smaller lots and purchase it over the course of a few days.This is because large quantities of bond purchases may be subject to spike in prices. Another point to note for bond investors is that just like investment in stocks, bonds have a scrip code.Moreover, the settlement cycle for bonds is the same as investment in stocks.

Disclaimer : *investment in securities market are subject to market risks, read all the related documents carefully before investing

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Fees and other Financial Terms and Conditions for Investing in Stock Baskets

  • The Client agrees to pay the fees calculated in the manner and on the rates as provided in the Schedule I.
  • The Basket profits or returns would include any dividends, benefits received out of corporate actions.
  • All the costs, fees, charges as per schedule I and expenses of whatsoever nature incurred by us in connection with the acquisition, holding, sale and transfer, in respect of the dematerialised state charges of the Depository Participant, in respect of Securities shall be paid by the Client.
  • A new separate DP account is required for all investors for the basket investments.
  • For new and existing clients, the Demat account will be used only for equity basket and Investor is free to open separate Demat account for self managed investment.
  • During the course of investment, we will invest as close as possible to the basket amount. Some small surplus to be left due to rounding off that amount will be managed /invest/return to the investor as suitable.
  • The stocks in the basket will be as per the discretion of the ACMIIL. These stocks would be reviewed from time to time and the rebalancing, (if any), of the stocks in the basket would be at the discretion of ACMIIL.
  • You are free to exit basket wise or exit from all basket at any point of time. You are not allowed to selectively exit from any stock or add any stock to the basket.
  • In case of a bank mandate, we will need 20% more mandate of the basket amount as the stock price will fluctuate time to time. The amount taken from bank would be actual value of Basket.
  • The Client agrees that in the event of a dispute, the Claims, if any, by the Client cannot exceed the fees paid by the Client for the year for advisory services in Rupee terms.
  • The client agrees that in case of any dispute, the claim and/or disputes will be referred to arbitration as per the Rules, Bye-laws and Regulations of the Stock Exchange where the trade is executed and the circulars/notices issued there under as may be in force from time to time.
  • As a SEBI registered stock broker, we are permitted to act as an adviser. This product is part of our advisory activity.

Schedule I

Fees Structure
Nature of FeesFees
Basket FeesINR 300 per basket + GST (Charged upfront)
Advisory Fees (Second year onwards)2% p.a+ GST (Charged upfront on Basket Value)
Approx Transaction Charges0.13%
Note: In Basket fees and Management Fees, GST will be recovered at the applicable rate.
Transaction charges includes Brokerage, STT, Stock Exchange charges, Stamp duty, SEBI Charges & GST

Fees Structure Example:

Suppose Client A has bought 1 basket for 36 months so he will pay INR 300 per basket as Basket fees for 36 months and from 13th month onwards he will pay Advisory fees for 1st basket as one year ends for the basket. So, after completion of one year the client A has to pay the Basket fees (13th month fresh basket) as well advisory fees (1st basket upfront Advisory fees for second year).

Transaction Charges Includes
HeadsRate
STT (Central Govt)0.1% on Transaction Value
Transaction Charges (Stock Exchange)0.0034% on Transaction Value
Stamp Duty & SEBI Charges0.011% on Transaction Value
GST18% on Transaction Charges.
  • I have understood that Investment in securities market is subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future performance and future results. The recommendations made by ACMIIL could be those that are based on its own research or on the advice of a SEBI registered Investment Adviser.
  • I have understood the equity basket fees terms and other financial conditions and the clarifications required by me. I understand that the investment in Equity basket is subject to risk associated with equity investments. I have understood the investment process and other aspects of the product.
  • I hereby agree to participate.

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