If no estate tax is imposed, capital gains taxes can be avoided indefinitely.
Bonds are issued by companies or governments and generally pay a stated interest rate. The market value of your chosen bond changes over time as it becomes more or less attractive to potential buyers. Bonds that are higher-quality generally offer lower interest rates. Bonds that have shorter maturities tend to offer lower interest rates.The risk-to-reward ratio on bonds is much more favourable compared to other asset classes.
Benefits of bonds
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Predictable And Stable Income - Bonds provide a predictable income stream and typically, it pays interest twice a year.
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Portfolio Diversification - bonds can help you diversify your portfolio and balance the risk-reward involved with different assets. It can also prove to be a great addition to your investment portfolio.
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Tax Benefit - A few specific types of bonds can help you reduce your tax burden. Tax-saving bonds enjoy special privileges under Section 80CCF of the Income Tax Act. Investment in tax-free bonds helps you earn tax-free income.
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Preserves Capital - If the bonds are held to maturity, bond-holders get back the entire principal.
