For generations, we have been routing for fixed deposits above all the other investments. And why wouldn’t we? It is the safest investment there is for our funds to relax for a long time. Fixed deposits offer great interest rates.
There was a time when investments like fixed deposits provided a good return on investment of 8 to 9 percent. Some even more than 9 percent. This isn’t the case lately. The times have changed. The economy has been affected by a host of factors in the past few years. Fixed Deposit interests see a downward trend as we speak. A meager return of 5-6% of FDs is not attractive anymore, to say the least, and doesn’t match up with the rising living expenses, lifestyle, and inflation. As a result, we are in need of an alternative to fixed deposits.
There appears to be detachment. Not in the number of investors believing in fixed deposits but the banks continuing to reduce FD rates, making fixed deposits a less redeemable choice for investors.
Individuals and senior investors are severely impacted not only in terms of investments but also realize that there is no other way to park their funds for a period of ten years or more. Hence, the dilemma.
To resolve your long-term investment dilemma, enter fixed-income bonds to rescue.
Let’s start with the basics of bonds.
Simply put, companies issue bonds as a form of debt to raise money through investors. Making the company a borrower of an asset. The issuer is liable to pay the promised interest until maturity, then the principal amount. There are high-risk as well as low-risk bonds.
Government, PSU, and corporates need to raise a large sum of money to finance their business needs. The most popular means of raising funds is by issuing bonds. Fundamentally, a bond is a financial agreement between the borrower of money and the lender. Bonds offer higher returns with lower risks than most of the other investment options available to retail investors.
For instance, ABC enterprises raise money from an individual or corporate lender and issue him bonds in return. ABC enterprises then must pay a fixed interest on the money it has borrowed from the bondholder. On maturity of the bond, the corporate return the principal amount to the bondholder.
A well-diversified investment portfolio should strike a balance between equities and fixed income, letting you rule out volatility while capturing growth along the way.
Bonds vs Fixed deposits
We are currently going through a time when an idea is brought to life in a day and within a week it’s reached the rendition stage. In a matter of a few months, the company is sold off to a larger company alienating the concept of actual profit or loss earned by the company on its own. To appeal to a crowd with such temperament, an investment instrument should showcase longevity, diversity, and returns.
If the question was raised a decade ago, younger investors might prefer fixed deposits because of the chance for bigger gains over time, while investors nearing retirement might prefer bonds because they are interested in getting that regular, dependable interest income with lesser risk. The nature of the world is different than it was a decade ago.
Bonds are a safe investment instrument for everyone.
The younger generation is well-versed with the market volatility and keens on securing their future just as much as a seasoned investor. The dynamic essence is stellar.
How to invest in bonds?
Investment in bonds is not nearly as tedious as it was a few years ago. With BondsIndia easily accessible bonds, investors can invest in bonds in three simple steps.
- Complete your KYC online
- Choose the bond of your liking
- Invest using a secured transaction method
Cut out the trouble of approaching a chorus of brokers and deep dive into understanding bonds on a forbearing platform, Bonds India.
It’s safe to say that bonds are equipped to provide you stability and multiplicity. Purchasing bonds online in India was unworkable a few years ago. But, with the influx of technology and the prevalence of the internet, bonds have become investors’ choice to succeed in the state of volatility.