8.05% interest, with RBI's promise!

Hey there!

Sorry for being MIA. It’s been a while! But I come bearing some news :)

After a 2+ year stint in the SaaS industry, I’m back in the personal finance space! I’ve joined ALT Investor as the Chief Business Officer, where our goal is to build India’s largest investor community focusing on alternate asset classes (This means, one, this newsletter will now be more active, and two, now I’m also going to be talking about other, lesser-known alternate investment products that can give you great returns!)

Think Real Estate. Bonds. Crypto. Anything apart from our traditional stocks, mutual funds and fixed deposits.

Well, why ALT? Because while traditional products are well-covered, alternates remain misunderstood and underrepresented. We believe that this is largely an education and awareness problem, which ALT Investor is here to solve.

So before I dive in to today’s newsletter, if you want to stay updated with insights on these upcoming (and lesser-known) asset classes, we have an exclusive newsletter for it. We start woth the first edition next week, and you can sign up HERE for early access :)

Okay, now let’s begin…

Well, we’re talking about RBI’s Floating Rate Savings Bond (FRSB).

Issued by the Reserve Bank of India, these bonds have a floating (or changing) rate of interest, that is reset every 6 months.

So while FDs today are giving 5-7% interest, these RBI bonds are giving 8.05%.

Well, they’re issued by the Reserve Bank of India. So unless the government goes bankrupt, you can rest assured that you’ll get your money back (oh, and if the government does go bankrupt, you and I will have way bigger problems than not getting our 8.05% interest 😉)

So in a nutshell, it’s as safe as it gets.

Yeah, the catch is that these bonds have a lock-in period of 7 years. So once you invest in them, your money is locked in for 7 years. And the rate can change every 6 months, (because floating rate bonds, remember?).

But my personal view is that the interest will still be higher than what bank FDs are giving. At least that’s how it has worked in the past.

You can read ALT Investor’s blog to know how these bonds work and how the interest rate is determined in detail. Link shared at the end of this newsletter.

1. Well, You. If you have a long-term horizon for fixed-return debt products, and you don’t want to take any risk. This, then, becomes a no-brainer. It really doesn’t get better than this :)

2. Second and more importantly, if you have senior citizen parents, this becomes a great investment option, because investors above the age of 60 can avail <drumroll, please> premature redemption!

   So, for a senior citizen investor, this becomes a great option - safety, high returns and lower lock-in 🙂

   

RBI’s Retail Direct platform allows you to explore and invest in these bonds.

So, in summary, if you’re risk-averse, this is a great option to consider.

This is all for today! Here are some links you may find useful.

1. ALT Investor’s detailed blog covering RBI’s FRSB (in case you need more details)

2. ALT Decoded newsletter (where you’ll get really interesting content about the world of alternate asset classes, helping you invest like the wealthy). The first edition comes out next Saturdayyyy!

And yes, I’ve been away for a while, but I promise to be more regular now. Would love to hear from you guys on how you’ve been doing, and what else you’d like to read on! Just hit “reply” and let me know..I love reading emails from you guys 🙂

Until next time…

PS: Please note that anything mentioned in this “Money simplified” newsletter is my personal view, and does not reflect the views of my employer.