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RBI Retail Direct Scheme & Gilt Account 2021 - How to invest in RBI Bonds & Government Securities? - YouTube
Channel: Asset Yogi
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Friends, today we will talk about the Revolutionary Bond market scheme.
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This scheme is brought to you by none other than RBI itself.
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Its name is RBI Retail Direct Scheme.
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If we talk in today's date as a retail investor we have too many options to invest in the stock market.
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We have too many brokers and too many mutual funds.
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But if we want to invest directly in the bonds then we have options like corporate bonds, public sector enterprises bonds.
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Definitely, we have some options to invest in their bonds as retail investors.
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But when we want to invest in the government security,
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so for them, we have to invest indirectly i.e we are investing money in insurance or in mutual funds.
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And those interns invest their money in government security.
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But this new scheme says, as a retail investor we can directly invest in it.
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We will understand this scheme in this video in detail.
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So what is this scheme after all? And what are its benefits?
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What are the possible risks and how they can be mitigated?
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And with that how can we invest in these government security schemes, that too at no cost.
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We will get to know everything in this video so stay tuned.
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Subscribe the channel to watch latest finance video.
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And do click on ALL after pressing the bell icon. So that you will get notification of latest video.
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Friends if you want learn more about the stock market and investments,
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so we have got a lot of playlists.
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Master investor series for stock market, mutual fund series, real estate series, bond series,
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you will get all these links in the description below.
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Apart from this, you will also get links of investment-related important videos in the description below.
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So friends, first of all, the question arises, what are bonds?
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If we want to summarise then bonds are fixed-income securities.
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That means you get fixed income and fixed interest rates from them.
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That means they act as FD or PPF i.e provident fund where your interest rate is fixed.
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On the other side in the stock market, there are not any fixed returns.
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There if the business grows then your stock market will grow.
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The business growth or the profit growth will lead to an increase in the share price and you will get the growth.
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And about bonds, we have done a detailed video,
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it consists of different terms in bonds and their meanings.
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You must see that video.
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So from stocks and bonds an overall portfolio is constructed, which we diversify in our investment.
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And bonds also plays an important role in our investment.
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If we talk about the international market of western countries,
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their bond market is bigger than the stock market.
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In fact, we have discussed these in previous videos also.
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But in India, this bond market was not that big yet.
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Retail participation is very important to make it large.
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So this RBI Retail Direct scheme has been brought for that.
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This means that this is a one-stop solution, where we can invest in government securities.
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And which government securities are these?
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If RBI issues any bonds then we can invest in them.
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We can also invest in central and state government bonds.
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If you remember we have talked about Sovereign gold bonds once, we can invest in them.
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Then we also have government-issued treasury bills that are also called T bills.
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The government securities which are less than 1 year maturity period,
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we can invest in them also through this portal.
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This portal has been made by RBI, where we can also invest in the primary market.
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That is, whenever new government security is issued as a new IPO comes in stock,
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so we can invest through any broker.
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Similarly, whenever new government security comes, we can directly invest in them.
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That is, we can invest in the primary market.
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Secondly, we can also invest in the secondary market.
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Suppose someone sells his bonds, i.e government bonds, If I want to buy that then I can.
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So here, as we see in the stock market, buyers and sellers don't know each other, order matching moves.
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The same thing will happen here that is we can transact in both primary and secondary markets.
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And investments has been made easy here, they are UPI enabled.
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Like we invest in IPO through UPI nowadays.
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Transactions can be done through net banking also.
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You will open your account that we will call a Gilt account. That will be linked to your savings bank account.
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So basically all bond markets will come online in which we can participate as retail investors.
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So it's all about the scheme broadly. What will be its benefits?
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Its first major benefit is that there is No Intermediary.
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There is not any fund manager, insurance and mutual funds. So we can invest directly.
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So if can invest directly that means there will be no commission.
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Mutual funds keep their commission, that commission will be removed.
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This platform is of zero cost as we directly invest through RBI.
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Thirdly, it's 100 % secured or near about 100 % secured.
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Hardly any investment is more secured than this; because here government promises guaranteed settlement.
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And here they are considered near about risk-free.
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Its fourth benefit is, as we talked about earlier that we can do all transactions online.
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Like we can invest in stock market online in today's date
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Similarly, we will be able to invest in the bond market online.
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We will be able to do both buying and selling,
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as we discussed earlier here both primary and secondary market operates.
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Then all the transactions will be anonymous as the transactions in the stock market are all anonymous.
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We don't know who is the buyer and who is the seller?
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Similarly here also we will don't know who is the buyer and who is the seller.
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The transactions would be anonymous.
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Then definitely here we will have high trust because we are investing through the RBI platform.
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So these are the benefits for the retail investor.
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Then what will be the benefits for the government here?
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So firstly, for the government, it's a good way to expand the bond market.
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And liquidity grows very much from it.
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When more transacts here then liquidity will increase.
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So if we want to sell our bond before maturity then we will get the buyer easily.
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So here the bond market will develop more nicely; as the western countries have.
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Secondly, if the government wants to raise funding at a large scale to execute the infrastructure projects.
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This will be great way too.
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So these are all of its benefits. Now let's talk about its risks.
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Generally, bonds have three types of risks.
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The first one is default risk.
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As we talked about default risk earlier, here it's zero as the government backs it.
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The second risk is market risk, which means that the interest rate will fluctuate up and down.
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So if we wait till maturity and if our holding period is 5 years, suppose we will sell that bond after 5 years.
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Then for us, there will be no risk because the promised interest rate will be given by the RBI or the bond issuing authority.
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But suppose if we sell those bonds after 2 years and at that time the interest rates are low,
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so because of that, we can have a little bit of loss.
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But we also have the liquidity because we can be sold it after 2 years.
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If still, you feel that this is a market risk then we can definitely hold them to mitigate our market risks.
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If we don't want to compromise our interest rate then we should sell after 5 years.
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The third is liquidity risk, if we talk about today's date then definitely most of the people don't know about this platform.
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Then it may be possible; if we buy any bond and can have no liquidity that means it has no buyers.
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So we may have to do a distress sale.
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But the only way for that is to hold till maturity if we can.
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Secondly, we have to put that much money only which is aligned to our goals.
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Suppose after 5 years if have to buy a vehicle or after 10 years you have to do your child's marriage.
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So I should take a bond of 10 years only. In this way market and liquidity risk is over.
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So overall the risks can be managed easily.
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So it's all about the benefits and the risks.
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Now the question arises that how will we invest in these government securities?
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So for that, the RBI has made a new portal, i.e. rbiretaildirect.org.in.
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In that, you can make your new account after filling in your details.
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Then whenever any government security is issued (likes a new IPO comes). Similarly, government security is introduced new.
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So by going into the primary market, we can bid for whatever units we want.
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There we can bid for those units through a bidding process.
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If those government securities are allotted to us then definitely it can be seen in our account.
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Secondly, if we want to transact in a secondary market then we can sell them,
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if we already have some bonds then we can sell here.
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If I want to buy new bonds that are already issued earlier,
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If I want to invest in them which were issued 6 months before, 1 year before.
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And if there are some sellers then I can buy from them.
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As we talked about earlier this is the same as the stock market transactions.
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It will be online and order matching will be the same.
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According to me, this is a very good system that is developing.
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So this was the way to invest in government securities.
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Now many of you will ask if we want to invest in corporate bonds, public sector enterprises bonds.
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How to invest in them? If you remember in one video we have talked about the Golden PI platform,
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for investing in them you can use it.
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It's the number 1 platform in today's date for investing in bonds.
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I will give you its link in the description below you can invest in them too.
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So see on one side we have central government security where we get high safety.
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So that's why this RBI platform will be very useful.
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On the other side, we have to get some better interests by taking high risks
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than for that, we can use this golden pi platform.
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So if we have to conclude then I would say that in today's date,
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we have too many good options for investment in the bond market.
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And we have to use all these platforms because it diversifies our investment.
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So all and all, I will say that this is a very good initiative of the government of India
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Now we have too many options to invest in the bond market.
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And with this, most people don't know about these platforms.
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So I would request that you please like this video and share this video to reach more people.
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Because most people don't know about these schemes in today's date.
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If you have any suggestions related to the video and channel then please write in the comment section below.
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In fact, I read all the comments within 1 hour of publishing the video.
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so that you get the notifications of the latest finance video.
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See you in the next informative video.
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Till then keep learning, keep earning and stay happy as always.
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