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Capital Gains Bond
Capital gain is the profit you make when you sell a capital asset. Based on the time, the asset has been in your possession the profit accrued is classified as short-term capital gain or long term capital gain and taxed accordingly. The long-term capital gain attracts a flat 28% tax or less subject to the tax bracket you find yourself in. Taxpayers can defer paying tax on long term capital gain by investing in Capital Gains Bond within a definite time frame. Capital Gains Bond are issued by specific federal institutions and tax benefits can be availed under certain sections of the Income Tax Act.
Tax deferral is possible only if the investment is made within 6 months of the sale of your capital asset. Furthermore the investment should be made for a period of at least 36 months to 5years from the date of buying the Capital Gains Bond. Redemption before the period of maturity negates all tax benefits. In essence Capital Gains Bond are an instrument to save on long-term gains tax by investing the proceeds in a federal bond.
Capital Bond Vouchers
Capital Bond Vouchers are gift vouchers available in denominations of 1, 2, 5, to 50 pounds depending on your budget. Capital Bond Vouchers are essentially a reward bonus given by companies to their employees, very popular with an in your face visibility, CBV are considered the best gift vouchers in the US.
Marketed exclusively by Capital Incentives and Motivation, these vouchers can be redeemed anywhere within the US and offer a gateway to an exclusive shopping experience. Over 140 high-end fashion outlets, electronics, sports shops, entertainment and restaurants accept these vouchers as payment.
Case Study: DHL US is the US branch of the global company with expertise in delivery and ocean freight, express and airfreight, and land transport. In appreciation of its employees, DHL US offers a long service award scheme. To implement this scheme DHL chose the Capital Bond Vouchers as rewards for its employees, since these vouchers can be redeemed in popular shopping stores such as Selfridges, WHSmith etc.
Bond Investments
A bond is a debt security, when you purchase a bond you are in effect loaning money to the government, municipality or a federal agency, known as the issuer. In exchange an interest is paid at regular intervals during the life of the bond and the face value of the bond is repaid at the end of the term.
Bonds are an important component of your investment portfolio but by no means the only one. Bonds offer a certain security and regular interest payments. Many types of bonds are available to suit your need and budget, like the secured bonds, debentures, zero coupon bonds, municipal bonds, treasury bonds, callable bonds, convertible bonds and junk bonds. Investment in bonds depends on your purpose of investment, the time frame and of course your budget.
The best possible investment in bonds is to diversify, to create a portfolio of different type of bonds, each with different characteristics.
Bond Investment Strategies
The 'buy and hold' strategy is when you invest in a bond and hold it till its maturity. You get regular interest payments and receive the face value of the bond at the time of maturity.
Laddering is an investment strategy by which you can manage interest risk. You create a portfolio of bonds with different times of maturity, say, 3, 5, 10 years. In this type of strategy, principal is returned at different intervals, which you can then reinvest.
A barbell strategy allows you to invest in short-term and long-term bonds but not in mid-term bonds.
A Bullet strategy enables you to purchase bonds at staggered intervals say you purchase a bond with a maturity of 15 years, then 5 years later you buy a 10 year bond and another 5 years later you buy a 5 year bond.
Bond Capital Investment Program
Capital Investment Program (CIP) is essentially an important planning exercise, which identifies the capital needs of a community as it develops and progresses. Capital Investment Program is updated biennially as factors affecting growth change, Capital Investment Program plans for future needs, allocation of finance, and public discussion. Capital Investment Program identifies basic infrastructure needs, maximizes the life of capital assets by scheduling timely renovations and maintenance and establishing priorities.
Capital projects are the establishment of capital assets, Capital projects define the necessary needs of a community like schools, parks, public transport, water and sewage infrastructure, shopping and entertainment outlets and sport facilities.
One of the sources of funding for capital assets is through bond financing. Finance for Capital Investment Program is raised by issuing municipal bonds like the general obligation bonds and project revenue bonds. The issue of these bonds must be approved by the voters first. Once approved these issued bonds finance identified Capital Investment Program.
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