Should a retiree invest in RBI floating-rate bonds?

RBI launched floating-rate taxable bonds in 2020. These bonds have a tenure of seven years. The interest rate of these bonds reset every six months in sync with the returns offered by National Savings Certificate (NSC) plus an additional 0.35 per cent. NSCs are currently offering 6.80 per cent. So, the coupon rate of these bonds is 7.15 per cent (6.80 + 0.35). The interest is paid on a half-yearly basis, with the next coupon payment likely to be released on July 1, 2022. Interest is added to the income and taxed as per the applicable slab. A premature exit is allowed for investors who are 60 years and above. For a senior citizen aged between 60-70 years, the lock-in period is six years. However, the lock-in period is five years for those who are aged 70-80

This article was originally published on June 01, 2022.