What are the advantages of investing in government securities (g-secs)?

The sovereign debt or government securities, also known as G-Sec (in India) are the safest financial instruments for investments available. Since the chances of the Indian government defaulting on the loan or interest payment are extremely low (there is always a possibility though like in many other countries in the past), the G-Secs are better than even bank deposits and hence the return on them are the lowest. It is a trade off for having the security of the principal. Remember bank deposit are NOTHING but lending your money to the bank and you are only entitled to just INR1 Lakh in case of your bank going bust. Due to the government backing, the G-Secs also enjoy higher collateral value for loans etc. And, finally, they are the most liquid form of investments. read less