Bond: Invest in bonds, safer than stocks and higher returns from banks – Invest In Bonds In India | Buy Bonds Online India Posted by Jeevan Utsav on September 20, 2021

If you are not satisfied with the amount of savings by keeping the earnings in a bank account and want to get manifold returns by investing the money elsewhere, that too without taking much risk, then at present Bonds can be a better option.

What is bond

First of all, it is important for you to understand that a bond is a type of loan. Government or companies issue bonds to raise debt. Suppose a company needs a loan for business and does not want to take loan from the bank, then it decides to take loan through bonds. Before issuing the bond, it decides the validity of the bond and the annual interest coupon. Bonds can be bought in two ways. Primary market and secondary market. In secondary, you get many broker type websites, but in terms of security, only government bonds and PSUs are convenient. 

What is Yield is the
amount of return on the bond yield, which is determined on the basis of the face value of the bond i.e. the initial fixed price. This is the amount at which the bonds are issued and returned to the holder at the time of maturity. The interest earned on the bond is called the coupon rate. An increase in the bond yield means a higher return from the bond. Price and bond yield are exactly opposite to each other. In this way, if an investor buys one bond at a face value of Rs 100 and sells the other at Rs 90, the new investor will also get an interest rate of 8% per annum, which is pre-determined. He will get this interest rate only on the face value i.e. Rs 100 and not on the rate of 90 purchased. 

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NOTE: The information is being presented without consideration of any specific investor’s investment objectives, risk tolerance or financial circumstances and may not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including potential loss of principal.