Save up on the tax free bonds at the earliest, say experts

This is the month that marks the beginning of another financial year for the employees and the businesses. While planning the year ahead with investments to look at, the individuals should make the most out of tax free investments.

The good old tax free bonds might see a complete stop in the next year 2014 – 15. The supply of most of these bonds has halted since March, and the prices have gone up by at least 2 to3 percent. Wealth experts confirm that the new government at the centre may not release these bonds next year, and even if they plan to start over with the fresh issue, it will take time.

The analysts advise the individuals to buy off the bonds at the earliest from the secondary market to still avail the returns and own them for the next financial year.

The anticipated sink in the interest rates also makes it risky to wait for the new bonds, this attributed to the fact that coupon rate of the new bonds will be lower than the recent issues. The tax free bonds could not collect prospective results in the year 12-13 due to the low interest rates offered, in the range of 6.9 percent to 7.4 percent. Meanwhile the spike in the last year with an increase in interest rates now enables fetching good coupon rates.

Talking about the same, there is a growth anticipated in the secondary market prices looking at the fall out in the primary. This makes way for the potential buyers to look at acquiring the bonds from the secondary market the coming year.

The above speculations are largely subject to the oncoming government making any new or breakthrough policies in the fiscal plan for the next year.