What Are Bonds?
Bonds are fixed-income instruments that represent a loan made by an investor to a borrower — typically a corporation or government. When you invest in a bond, you're lending money in return for regular interest payments (called coupons) and the return of the principal at maturity.
Bonds are considered relatively safe investments and are ideal for those looking for predictable income, capital preservation, and portfolio diversification. Because of their lower volatility compared to stocks, bonds are often used to balance risk in a well-diversified investment portfolio.
Each bond has a face value (the amount paid back at maturity), a maturity date (when the principal is repaid), and a fixed or floating interest rate. Bonds can be held to maturity or traded in the secondary market before they mature.
Government Bonds
Issued by central and state governments, backed by sovereign guarantee, and considered one of the safest investments.
Corporate Bonds
Issued by companies to raise capital. They offer higher returns compared to government bonds, with varying risk levels.
Tax-Free Bonds
Issued by government-backed entities. The interest earned is exempt from income tax under Section 10 of the IT Act.
Debentures
Unsecured corporate debt instruments offering fixed returns. Choose from convertible and non-convertible options.
Why Invest in Bonds?
- Stable and predictable income
- Lower risk than equities
- Diversifies your investment portfolio
- Capital protection on maturity