POSTED BY October 17, 2013 8:16 am COMMENTS (4)ON
Could someone pls clarify all the disadvantages of Tax-Free Bonds in comparison to Bank FDs. To put it otherwise, in what circumstances should someone prefer 10 year Bank FDs over 10 year tax-free bonds for their debt portfolio, ASSUMING both of them have approx. EQUAL post-tax returns?
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4 replies on this article “10 year Tax-Free Bonds Vs Bank FD”
Dear Jram, how can tax free bonds and bank FDs provide equal post tax return?
I don’t think the tax-free bonds have the cumulative option. One issue could be liquidity, particularly for smaller-sized transactions. Otherwise, if one doesn’t care much for liquidity, I think the tax-free bonds might be the way to go for the debt aspect of the portfolio.
Hi Anshuk, Unfortunately, as far a I am aware, only Bank FDs have cumulative option currently. Any other points that you could think of?
I don’t see a difference if both have cumulative option