Are government bonds completely risk-free?

They are credit risk-free, not risk-free overall. The Government of India has never defaulted on domestic debt, so your principal and coupons are virtually certain if you hold to maturity. But G-Secs carry significant interest-rate risk — a 10-year bond can swing 8–9% in price for a 1% move in rates — plus inflation risk, where real returns turn negative if inflation exceeds the coupon.

How do retail investors buy G-Secs in India?

The simplest route is RBI Retail Direct (rbiretaildirect.org.in), which allows direct purchase of G-Secs, T-Bills and SGBs from a ₹10,000 minimum with no intermediary cost. Alternatives are gilt mutual funds (₹500–5,000 minimum, daily liquidity), G-Sec ETFs on the exchange, and primary-dealer platforms for larger tickets.

Is it more tax-efficient to hold G-Secs directly or through a gilt fund?

Direct G-Secs held over 12 months qualify for 12.5% long-term capital gains tax without indexation — a meaningful edge for 20%/30% bracket investors who may sell before maturity. Gilt mutual funds, post April 2023, are taxed entirely at slab rate with no LTCG benefit. Interest and coupon income are taxed at slab rate in both cases.

Should I choose G-Secs or a bank fixed deposit?

For amounts up to ₹5 lakh per bank, a bank FD is functionally as safe as a G-Sec because of DICGC insurance, and simpler. The G-Sec advantage appears beyond that limit: sovereign safety with no upper cap, secondary-market liquidity without penalty, and the 12.5% LTCG route on direct holdings. FDs win for absolute principal certainty on early exit and the Section 80C tax-saver option.

Conceptual · Article 2.1.4.2

Government Bonds (G-Secs).

Q: Can I lose money in government bonds?

If you hold to maturity you get your exact principal back plus all coupons — no nominal loss. But if you sell before maturity after rates have risen, you sell at a loss: a 10-year G-Sec can fall to ₹92–93 per ₹100 if yields rise 1%. Inflation also erodes real purchasing power even when the nominal return is positive.

India's Risk-Free Rate. Credit-Safe, Not Price-Safe.

Published as on 22 July 2026

A Government Bond, or G-Sec, is a loan you make to the Government of India for a fixed period, in exchange for a fixed coupon paid every six months and your principal returned at maturity. It is the safest credit instrument in the country — the sovereign has never defaulted on its domestic debt. But "safe" applies only to repayment, not to price. As market interest rates move, a G-Sec's price moves in the opposite direction, and a 10-year bond can swing 8–9% for a 1% shift in rates. As of February 2026 the 10-year yield is ~6.67% against a 5.25% repo rate — after 125 bps of cuts — giving a historically attractive real yield near 4.5%. Retail investors now access G-Secs directly from ₹10,000 on RBI Retail Direct.

Sovereign

Credit Backing

~6.67%

10Y Yield (Feb 2026)

~8.5 yr

Duration (10Y G-Sec)

12.5%*

Direct LTCG (>12mo)

Executive Summary · Page 2

Executive Summary · 6 Findings

A G-Sec is money lent to the Government of India — the benchmark against which every other rupee investment is priced. It answers a precise question: where do I put capital that must not carry default risk? The catch most investors miss: minimal credit risk does not mean minimal risk. The government will repay, but the bond's price moves every day with the RBI rate cycle, and inflation quietly erodes the real value of a fixed coupon.

Covers what a G-Sec is and why the government issues them, why sovereign backing removes credit risk but not interest-rate or inflation risk, how duration translates rate moves into price swings, the family of government securities (G-Secs, T-Bills, SDLs, SGBs), the four retail access routes, direct-vs-fund taxation, the full G-Sec-vs-FD comparison, five misconceptions, portfolio construction strategies, and seven questions Indian investors ask.

Key Findings

A loan to the safest borrower in India.

Buy a G-Sec and you lend to the Government of India: a fixed coupon every six months, principal back at maturity. The sovereign can tax and print to honour its debt, so credit risk is minimal — it has never defaulted on domestic obligations. This is why the G-Sec yield is the "risk-free" rate underpinning the entire financial system.

Two risks, not zero risk.

"Government bond = zero risk" is wrong. G-Secs carry minimal credit risk but substantial interest-rate risk: bond prices and rates move in opposite directions. Hold to maturity and price swings are irrelevant — you get your coupon and principal. Sell early and a rate rise can hand you a real loss.

Duration is the lever. ~8.5 years on a 10Y bond.

Duration measures price sensitivity to rates. A 1-year T-Bill barely moves (±1%); a 10-year G-Sec carries ~8.5 years of duration, so a 1% rate move shifts price ~8.5%; a 30-year bond swings ~16%. Longer maturity means larger swings in both directions — a defining feature, not a footnote.

An attractive real yield — for now.

The 10-year yields ~6.67% against inflation of ~2.1% (FY26), a real yield near 4.5% — historically generous versus the 0.5–1% real yields of 2021-22. But after 125 bps of RBI cuts and a pause at 5.25%, most of the easy capital gains are behind us. Buying now means expecting returns close to the coupon, not big price appreciation.

Direct holding is more tax-efficient than a gilt fund.

Coupon income is taxed at slab rate either way. But capital gains on directly-held G-Secs (via RBI Retail Direct or demat) held over 12 months are taxed at just 12.5% without indexation. Gilt mutual funds, post April 2023, tax all gains at slab rate — no LTCG benefit. For higher brackets who may sell early, direct holding wins.

A stability tool, not a wealth engine.

G-Secs preserve capital, diversify away from bank-concentration risk, and provide predictable coupon income — especially valuable beyond the ₹5 lakh DICGC insurance limit on FDs. They are not equity substitutes (6–7% in normal times), not inflation hedges, and not for money you might need next month. Match the bond's maturity to your goal.

At A Glance

Metric	Value	Detail
Issuer	Govt of India	Central G-Secs
Credit Risk	Minimal	Sovereign guarantee
Price Risk	High	Duration-driven
Duration (10Y)	~8.5 yr	~8.5% per 1% rate
Min Investment	₹10,000	RBI Retail Direct
10Y Yield / Real	~6.67% / ~4.5%	Feb 2026, RBI-linked
Tax — Direct	12.5% LTCG*	Held >12 months
Best Use	Capital preservation	Not emergency fund

Exhibit 01: ₹10,00,000 in a 10Y G-Sec, 1% Rate Move

Rate Scenario	Price Impact	Value
Yields +1% (rise)	−8.5%	~₹9,15,000
No change	Coupon income only	~₹10,00,000 + coupon
Yields −1% (fall)	+8.5%	~₹10,85,000

Illustrative, short-term price impact only, assuming ~8.5-year modified duration on a 10Y G-Sec and a parallel rate move. The bond itself remains fully repayable regardless of price movement — these swings matter only if you sell before maturity. Shorter maturities swing far less; a 1-year T-Bill barely moves.

The Opening · Page 3

The Opening

A Government Bond is the simplest promise in finance: lend the Government of India a sum today, collect a fixed coupon every six months, and get your principal back on a set date. Ramesh buys a 10-year G-Sec of ₹1,00,000 at a 6.70% coupon — ₹3,350 lands in his account twice a year, and ₹1,00,000 returns after ten years. The short version: a G-Sec is a loan to the highest-creditworthiness borrower in the country.

"The Government of India can tax and print to repay its debt — companies cannot. That makes the G-Sec the safest credit instrument in India, and its yield the baseline against which every other rupee investment is measured. But safety of repayment is not the same as safety of price."
The Risk-Free Benchmark

The mechanics. Say you hold a bond paying 6.70% and the RBI's actions push new bonds to 7.70%. No one buys your old bond at par — its price falls until its effective yield matches the market. That price adjustment is interest-rate risk, and it affects every fixed-income instrument. Duration measures the size of the swing: a 10-year G-Sec carries roughly 8.5 years of it, so a 1% rate move shifts its price about 8.5%.

The February 2026 context. After 125 basis points of RBI rate cuts since February 2025, the repo sits at 5.25% and the 10-year yields ~6.67%. With inflation near 2.1%, the real yield of ~4.5% is unusually attractive by historical standards — but with the RBI paused at a neutral stance, much of the potential capital gain from falling rates is already priced in.

The Honest Boundary: G-Secs are NOT an emergency fund — a 10-year bond can fall 8–9% if rates rise and you must sell. They are NOT an FD substitute with guaranteed principal on early exit. They are NOT an inflation hedge — the coupon is nominal. They ARE the cleanest sovereign-safe home for capital: minimal default risk, secondary-market liquidity, and a real yield that currently rewards patience.

Structure

Part I

What a G-Sec Is, Why It's Issued & the Family of Securities

Part II

The Two Risks, Duration Math & the Rate Cycle

Part III

How to Invest, Taxation & G-Secs vs Fixed Deposits

Part IV

The Verdict: Stability, Used Deliberately

Use If

✓ Preserving capital beyond ₹5L per bank

✓ Goal maturity matches a bond maturity

✓ Want liquidity without penalty

✓ Comfortable with mark-to-market swings

Do NOT Use If

✕ Need the money in 6–12 months

✕ Want guaranteed principal on early exit

✕ Chasing equity-like returns

✕ Relying on it to beat inflation

Part I

What a G-Sec Is, Why the Government Issues It, and the Family of Securities

The sovereign IOU that anchors India's fixed-income market; why the government borrows through bonds; what makes the G-Sec the risk-free benchmark; and the four instruments — G-Secs, T-Bills, SDLs and SGBs — that make up the government securities family.

Part I · Page 4

Why the Government Issues Bonds

Purpose	What It Funds
Fiscal deficit	Spending above tax revenue
Infrastructure	Roads, railways, defence
Refinancing	Replacing maturing debt
Liquidity	Managing money supply

The RBI acts as the government's banker and conducts these bond auctions on its behalf. For FY 2025-26 the government has planned record gross borrowing through G-Secs to support development spending while holding to fiscal discipline.

Why It's the "Risk-Free" Benchmark

Instrument	Default Risk	Backing
G-Secs	Minimal	Sovereign + taxation
Corporate Bonds	Varies	Company profits
Bank FDs	Low	DICGC to ₹5 lakh

Current spreads (Feb 2026) tell the story: 10Y G-Sec ~6.67%, bank FDs 6.00–6.50% (general), AAA corporate bonds 7.50–8.50%. That extra corporate yield — the "spread" — is compensation for taking credit risk the sovereign simply does not carry.

The Government Securities Family

1. Central G-Secs

Long-term central government bonds, 5–40 year maturities, fixed semi-annual coupon, tradable in the secondary market. Feb 2026 yields: 5-year ~6.30–6.40%, 10-year ~6.67%, 30-year ~7.44%.

2. Treasury Bills (T-Bills)

Short-term central paper — 91, 182 or 364 days — with no coupon. Sold at a discount, redeemed at face value. Buy a 91-day T-Bill of ₹1,00,000 at ₹98,625; the ₹1,375 gap is your return. Yields ~5.50–6.00%.

3. State Development Loans (SDLs)

Bonds issued by state governments. Very high safety, but technically distinct from central G-Secs — so they yield ~0.25–0.75% more for marginally higher perceived risk.

4. Sovereign Gold Bonds (SGBs)

Government bonds linked to gold: 2.50% annual interest on the initial value, 8-year maturity with a 5-year exit. Return = gold appreciation + interest. Covered in detail in the Verdict.

The naming nuance: "G-Sec" strictly means central government securities. SDLs and SGBs sit under the broader "government securities" or "sovereign debt" umbrella but are technically separate issues. All share the sovereign's backing; their yields differ by issuer and structure.

Part II

The Two Risks, the Duration Math, and Where We Are in the Rate Cycle

Why sovereign backing removes credit risk but not interest-rate or inflation risk, how modified duration turns rate moves into price swings, what the current RBI cycle means for new buyers, and why the real yield matters more than the nominal.

Part II · Page 6

Credit Risk vs Interest-Rate Risk

Credit Risk — Nearly Zero

The Government of India has never defaulted on domestic debt. Principal and coupon are virtually certain if you hold to maturity.

Interest-Rate Risk — Substantial

Prices and rates move oppositely. When the RBI cut rates in Dec 2025, 10Y yields fell ~6.80% → ~6.67% and a ₹10 lakh holding gained ~₹12,000–15,000. When the RBI hiked in 2022-23, holders took mark-to-market losses. Hold to maturity and it is noise; sell early and it is real.

Duration: The Sensitivity Framework

Maturity	~Duration	Price per 1% Rate Move
1-yr T-Bill	~1 yr	±1%
5-yr G-Sec	~4.5 yr	±4.5%
10-yr G-Sec	~8.5 yr	±8.5%
30-yr G-Sec	~16 yr	±16%

Translation: if the 10-year yield rises 6.70% → 7.70%, a ₹10 lakh holding falls to ~₹9,15,000; if it falls to 5.70%, it rises to ~₹10,85,000. Longer bonds swing more violently — which is precisely why 30-year bonds and long-duration gilt funds are a distinct, higher-risk category.

The RBI Rate Cycle

Date	Repo Rate	Move
Feb 2025	6.50%	Peak
Apr–Oct 2025	6.25% → 5.50%	−100 bps
Dec 2025	5.25%	−25 bps
Feb 2026	5.25%	Pause

Total easing: 125 bps since February 2025. The RBI has now signalled a pause: GDP growth revised up to 7.4% for FY26, inflation ~2.1% (rising toward 4% in early FY27), stance "Neutral."

Real Return: What Actually Matters

The Inflation-Adjusted Picture

10Y nominal ~6.67% − inflation ~2.1% = real yield ~4.5%. Compare 2021-22, when 6–6.5% yields against 5–6% inflation left real yields of just 0.5–1%. Today's cushion is far healthier — the case for G-Secs is stronger now than in 2024 despite lower nominal coupons.

The honest truth: a 6.70% coupon looks attractive, but if inflation climbs back to 5% your real return is only 1.70%. And with the RBI paused after 125 bps of cuts, investors buying now should expect returns close to the coupon rate — not the 8–12% total returns that 2023-24 buyers captured as rates fell. Set expectations to the coupon, treat any capital gain as a bonus.

Part III

How to Invest, How You're Taxed, and G-Secs versus Fixed Deposits

The four retail access routes led by RBI Retail Direct; why direct holdings enjoy a 12.5% LTCG rate that gilt funds lost after April 2023; and the honest, line-by-line comparison of G-Secs against the bank fixed deposit most Indians default to.

Part III · Page 8

Four Ways to Invest

Route	Minimum	Best For
RBI Retail Direct	₹10,000	Direct ownership, no cost
Gilt Mutual Funds	₹500–5,000	Daily liquidity, management
G-Sec ETFs	1 unit	Low cost, exchange-traded
Primary Dealers	Varies	Large tickets (₹5L+)

RBI Retail Direct — The Direct Route

Launched 2021: open an account online, complete KYC, and buy G-Secs, T-Bills and SGBs directly from ₹10,000 with no intermediary cost. Use only the official rbiretaildirect.org.in to avoid phishing sites. Note: small odd-lot sales (₹20,000–50,000) can face wider bid-ask spreads than institutional blocks — ₹5 lakh+ positions trade more efficiently.

Taxation — The Key Distinction

Direct Holding (Retail Direct / Demat)

Coupon: slab rate, no TDS. Capital gains: ≤12 months slab rate; >12 months just 12.5% without indexation (Finance Act 2024). Direct G-Secs keep the preferential LTCG treatment that debt funds lost.

Via Gilt Mutual Funds

Post-April 2023: all gains taxed at slab rate — no short/long distinction, no indexation. IDCW taxed at slab; 10% TDS if annual IDCW from a fund house exceeds ₹10,000.

G-Secs vs Bank Fixed Deposits

Aspect	G-Secs	Bank FDs
Credit safety	Sovereign, no cap	DICGC to ₹5L
Liquidity	Sell anytime (price risk)	Penalty on early exit
Early exit	Market price	Principal safe
Gains tax	12.5% LTCG (direct)	N/A
80C option	No	5-yr tax-saver

Yields Side-by-Side (Feb 2026)

Tenure	G-Sec	FD (Gen / Sr)
1 year	~5.55%	5.50–6.00% / 6.00–6.50%
3 years	~6.30%	6.00–6.45% / 6.50–7.05%
5 years	~6.50%	6.30–6.50% / 6.80–7.10%
10 years	~6.67%	Rarely offered

*Indicative, subject to change. FD rates for major banks; senior citizens typically +0.25–0.50%. G-Sec yields from the secondary market, February 2026.

The honest truth: for ₹5 lakh or less per bank, an FD is functionally as safe as a G-Sec thanks to DICGC insurance — and simpler. The G-Sec edge only "kicks in" from the sixth lakh onward: sovereign safety with no cap, penalty-free liquidity, and the 12.5% LTCG route on direct holdings. Many conservative investors hold both — FDs for certainty, G-Secs for larger tickets and liquidity.

Part IV

The Verdict

Sovereign safety of repayment. Not safety of price.

Part IV: The Verdict · Page 10

30-Second Summary

A Government Bond is a loan to the Government of India — the safest credit in the country, and the risk-free rate the whole system is priced off. Minimal default risk, but real interest-rate risk: a 10-year bond carries ~8.5 years of duration, so a 1% rate move shifts its price ~8.5%. As of February 2026 the 10-year yields ~6.67% against ~2.1% inflation — a ~4.5% real yield that is historically attractive, even as 125 bps of RBI cuts leave little easy capital gain ahead.

Access is now genuinely retail: RBI Retail Direct from ₹10,000, plus gilt funds, G-Sec ETFs and primary dealers. Tax matters — directly-held G-Secs kept for over 12 months are taxed at just 12.5%, while gilt funds pay slab rate on everything. Use G-Secs for capital preservation beyond the ₹5 lakh FD insurance limit, goal-matched maturities, and portfolio stability. Do not use them as an emergency fund, an FD substitute with guaranteed early-exit value, or an inflation hedge.

"Sovereign backing answers one question — will I be repaid? Yes. It says nothing about the other — what will my bond be worth next month? That depends on the RBI's rate cycle and the bond's duration. The investor who treats a long-dated G-Sec as a risk-free parking spot has confused the safety of the issuer with the safety of the price."
The Final Orientation

The Bottom Line: Use G-Secs for sovereign-safe stability — minimal default risk, real price risk. Match maturity to your goal and the price swings disappear. Prefer direct holding via RBI Retail Direct for the 12.5% LTCG edge; use gilt funds for small amounts and daily liquidity, accepting slab-rate tax. Never park money you need within a year in a long-dated bond. Set your return expectation to the coupon (~6–7%), treat any rate-cut gain as a bonus, and remember the ~4.5% real yield is the quiet reason today's lower coupon is more attractive than it looks. Verify current yields and scheme details before investing.

ADWIZR · July 2026

Decision Rules

Use Correctly As

✓ Capital preservation beyond ₹5L/bank

✓ Goal-matched maturity (hold to maturity)

✓ Diversifier vs bank concentration

✓ Predictable coupon income for retirees

Misuse Destroys Value

✕ Emergency fund / 0–1 yr money

✕ Chasing equity-like returns

✕ Long-duration bets without understanding

✕ Expecting an inflation hedge

Portfolio Strategies & SGBs

Four Ways to Build Exposure

(1) Laddering: stagger maturities (2/4/6/8/10-yr) for regular liquidity and rate averaging. (2) Barbell: 50% 1-yr T-Bills + 50% 10-yr G-Secs. (3) Hybrid: gilt fund core + direct G-Secs for chosen yields. (4) Duration matching: a 7-year bond for a 7-year goal locks today's yield.

SGBs: The Hybrid G-Sec

2.50% annual interest + gold price exposure, 8-year maturity (5-year exit). Uniquely, capital gains are fully tax-exempt if held to maturity — the only government security with tax-free gains. Interest is taxable at slab rate.

Three Misconceptions

What Investors Get Wrong

(1) "G-Secs are just like FDs." No — their price fluctuates daily; you get exactly par back only at maturity. (2) "Government bonds are risk-free." Credit-safe, yes; but prices swing 5–16% and inflation can turn real returns negative. (3) "Held to maturity, I can't lose." Nominal principal is safe, but inflation erodes purchasing power and you bear opportunity cost if rates rise.

Minimal

Credit risk

Sovereign issuer

~8.5%

Price per 1% rate

10Y, ~8.5yr duration

12.5%

LTCG, direct

Held >12 months

Investor FAQ

Questions Indian Investors Ask

Seven questions, answered directly.

Investor FAQ · Page 12

Frequently Asked Questions

Q1 If G-Secs are so safe, why not invest everything in them instead of stocks?

Safety and growth serve different purposes. G-Secs preserve capital and provide stable income (6–7% typically), while equities aim for wealth creation (historically 12–15% over long periods). A retiree needing predictable income leans to G-Secs; a 30-year-old saving for a goal 25 years away leans to equity's growth. Optimal portfolios use both — G-Secs for stability, equities for growth — in proportions matching your risk capacity and horizon.

Q2 Can I lose money in government bonds?

Hold to maturity and you get your exact principal plus every coupon — no nominal loss. But sell before maturity after rates have risen and you sell at a loss: a 10-year G-Sec bought at 6.50% can fall to ₹92–93 per ₹100 if yields rise to 7.50%. Inflation also erodes real purchasing power — a 6.70% return loses to 7% inflation in real terms. That said, the current ~4.5% real yield is historically attractive.

Q3 Are gilt mutual funds better than buying G-Secs directly?

It depends on amount and convenience. Direct G-Secs suit investors with ₹1–2 lakh+ per bond, a clear maturity horizon and willingness to self-manage — you save the 0.5–1% expense ratio and get the 12.5% LTCG benefit if sold after 12 months. Gilt funds suit smaller amounts (₹5,000 minimum), daily liquidity and professional duration management, but all gains are taxed at slab rate. For a ₹10 lakh allocation a hybrid works well: ₹6 lakh direct + ₹4 lakh gilt fund.

Q4 Why do 30-year yields (7.44%) barely exceed 10-year yields (6.67%)?

The yield curve reflects expectations about future rates and inflation. In February 2026 it is relatively flat — investors expect rates to stay stable after recent cuts, so locking money 20 extra years earns only ~0.77% more. A steep curve signals expected rate rises; a flat curve like today signals equilibrium. For most retail investors the 10-year offers better risk-reward than the 30-year, whose ~16-year duration means a 1% rate rise causes a ~16% price drop — heavy volatility for only 0.77% of extra yield.

Q5 How do I know if now is a good time to invest?

Timing is hard, but a framework helps. Good times: early in a rate-cutting cycle (prices have room to rise), when yields are at multi-year highs, or when a bond's maturity matches your goal. Poor times: late in a cutting cycle when most gains are captured (like February 2026), or when the RBI signals tightening. Today, after 125 bps of cuts and a pause at a neutral stance, the easy gains are realised — but the ~4.5% real yield makes it a reasonable entry for long-term, hold-to-maturity goals. It is a weaker moment for speculating on further rate cuts.

Q6 What happens to my G-Sec if I die before maturity?

G-Secs held in demat or an RBI Retail Direct account pass to your nominee exactly like shares or mutual fund units — the nominee can hold to maturity or sell. If you invested through a gilt fund, the fund units pass to your nominee. Keep nomination updated in your demat account, Retail Direct account or fund folio. There is no complex transmission process; and if held jointly in Retail Direct, the surviving holder automatically gets full ownership.

Q7 Can I use government bonds as collateral for loans?

Yes — G-Secs are among the most accepted collateral. Banks typically lend 75–90% of the bond's market value, charging roughly 1–2% above its coupon. Pledge ₹10 lakh of G-Secs, get ₹8–9 lakh at 8–9% while the bond keeps earning its 6.70% coupon — useful for short-term liquidity without selling and forgoing potential gains. But if bond prices fall, the collateral value drops and you may need to top up or repay part of the loan.

Key Terms & Definitions

G-Sec (Government Security)

A bond — essentially an IOU — issued by the Government of India to borrow money. It pays a fixed coupon every six months and repays principal on a set date. Carries minimal credit/default risk; the sovereign is the safest issuer in the country, and its yield is the "risk-free" benchmark rate.

Coupon vs Yield

The coupon is the fixed interest rate printed on the bond (paid semi-annually). The yield is the effective return based on the current market price — which moves as rates change. When prices fall, yields rise, and vice versa.

Interest-Rate / Duration Risk

The risk that a bond's price moves as market rates change: rates up → prices down, rates down → prices up. Modified duration measures the size — roughly, a 1% rate move shifts price by the duration in years. A 10-year G-Sec runs ~8.5 years; a 30-year runs ~16.

Real Yield

The nominal yield minus inflation — the true growth in purchasing power. A 6.67% yield against 2.1% inflation gives a ~4.5% real yield. If inflation rises to match the coupon, the real yield collapses toward zero regardless of the headline number.

RBI Retail Direct

The RBI's platform (launched 2021, rbiretaildirect.org.in) allowing retail investors to buy G-Secs, T-Bills and SGBs directly from a ₹10,000 minimum with no intermediary cost. Direct ownership also preserves the 12.5% LTCG tax treatment on holdings over 12 months.

T-Bill / SDL / SGB

Members of the government securities family: Treasury Bills are short-term (≤1 year) zero-coupon paper sold at a discount; State Development Loans are state-government bonds yielding ~0.25–0.75% more than central G-Secs; Sovereign Gold Bonds pay 2.50% plus gold-price returns, tax-free at maturity.