Bharat bonds is bonds ETF (exchange traded fund) that invests in high quality government bonds. Since the bonds are backed by the government, it is safer choice.

It is open for subscription (investment) now (till 17th July) and has two series options — one maturing in 5 years and the other in 11 years. Based on the yields of the underlying index, investors in the second tranche of the ETF maturing in April 2025 could earn 5.71 per cent, while those maturing in April 2031 could earn 6.82 per cent.

Apart from security, it also provides liquidity in secondary market. Meaning, we can trade them like share in demat account. But caution is, don’t expect lot of trading volume, meaning we may have to sell it at discount.

Since this is treated like debt instrument, it has indexation benefit, which means investors pay 20 per cent tax on long-term capital gains, which significantly lowers tax liability and leads to higher post-tax returns.

In a nutshell, it is safer, liquid (with some constraints) and tax efficient compared to our Bank FDs.

But as returns tend to fluctuate in short term, it is better to stay invested in this for at least 2 years.

Suggest you to also look at post office saving schemes especially PPF, SCSS, Sukanya Samridhi- all have higher return than this. And if you are least bothered about liquidity then VPF (Voluntary Provident Fund), wins.