Is it Advisable to Invest in RBI Bonds?

Is it Advisable to invest in RBI Bonds?

Recently one of my friend has asked me the above question. Well, Here is the answer.

Well, yes... as a safety point of view it is safest. but it gives just 8.5% fixed annual return. So it's not the best thing for Capital gains. Now, let me tell u that what's the problem in global economy. recently US government did US $ 1.2 Trillion bail out.

This $ 1.2 Trillion is printed by federal government out of thin air only. So this newly... Read More printed money is diluting the purchasing power of the existing money in the circulation worldwide including India. So sooner or later the world will suffer hyperinflation. And during the time of hyperinflation, it is not advisable to go for RBI bonds.

Right now it is ok because Indian economy is in deflation (Negative Inflation). because it's better to be lender (bond holder) during the time of deflation....

Let me give you the simple formula of counting real return from any asset.

Actual Return = Return offered by Asset – Inflation – Tax

So in case of RBI Bonds, currently you will earn, 8.5 – (-1.5) – 1.5 = + 8.5% actual return.

Well, yes. Currently the Indian economy is in deflation so i have taken negative inflation into consideration. So currently it is advisable to invest in RBI Bonds. But very sooner or later the world economy will experience Hyperinflation. And that time the return from RBI Bonds will turn into Negative.

So you should invest in RBI Bonds after analyzing domestic and global economy.