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Secure your future with the strength of bonds
A bond is a unit of debt issued by companies and securitized as a tradeable asset that pays a fixed interest rate (coupon) to debtholders. When an entity issues a bond, they are essentially borrowing money from investors, who become the bondholders. In return, the issuer of the bond agrees to pay periodic interest payments to the bondholders and return the principal amount (the initial amount borrowed) when the bond matures. The interest pay out can be variable or floating, depending on the terms the investors sign up for.
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Interest rates and bond prices are inversely correlated: when rates rise, bond prices fall, and vice versa.
Bonds provide predictable and stable income streams. In most cases, the bondholder receives the entire principal amount with interest if he/she holds the bond till maturity. Therefore, they are considered an effective way to preserve capital. Bonds can also offset highly volatile shareholdings.
There are four types of bonds:
Issued by the government directly, these are secured as they are backed by the sovereign guarantee of the government. In India, the Government of India underwrites these bonds, and they mostly offer a low rate of interest.
Issued by private companies, corporate bonds can be secured or non-secured.
These are issued by the government of India to provide tax-saving benefits to individuals.
These bonds are issued by various banks and financial institutions.
Expenses such as transaction fees and management fees can take a bite out of your investment. We keep these expenses low, allowing a greater percentage of your investment capital to remain invested in the bonds themselves, potentially increasing your returns. This also allows us to offer highly competitive pricing.
Our dedicated experts help you make informed and timely investment decisions about bond prices and yields, based on current macro-economic and investment trends. They help you build a bond portfolio based on your risk tolerance, needs, and diversification preferences.
The investors who are eligible for investing in government-guaranteed bonds include individuals, trusts, Hindu Undivided Family, limited liability partnerships, a partnership firm(s), associations of persons, portfolio managers registered with SEBI, companies, and bodies corporate including public sector undertakings, scheduled commercial banks, regional rural banks, insurance companies, financial institutions, mutual funds, foreign portfolio investors, and any other investor eligible to participate in these bonds in accordance with applicable law. Investing in a particular instrument may have different eligibility criteria, so it is imperative to carefully read the term sheet, Information Memorandum, and other documents before investing.
Documents required to invest in bonds
1. Photo
2. Pan Card
3. Address proof (Aadhaar/ Driving License/ Passport/ Voter ID)
4. Cancelled Cheque
5. DEMAT AC Number
A bond is a debt security that represents a loan made by an investor to a corporation or government entity. It involves periodic interest payments and the return of the principal amount at the bond's maturity.
When an entity issues a bond, it borrows money from investors (bondholders) and agrees to pay periodic interest (coupon) and return the principal amount at maturity. Investors, like you, receive income through interest payments.
Stocks represent ownership in a company, while bonds represent debt. Bondholders are creditors and have a higher claim on assets than stockholders. Bonds provide fixed income, while stocks offer ownership in a company and potentially higher returns but with more risk.
Bonds carry risks, including interest rate risk (bond prices can fall when interest rates rise), credit risk (the risk of the issuer defaulting on payments), and inflation risk (the potential for inflation to erode the bond's purchasing power).
Bonds can be bought through brokers, financial institutions, or on the secondary market. Investors can sell bonds in the secondary market before their maturity, but prices may vary based on market conditions.
Bonds are generally carry a lower risk profile than stocks but are not entirely risk-free. The safety of a bond depends on factors such as the issuer's creditworthiness and economic conditions.
Bond income may be subject to taxation, and the tax treatment depends on factors such as the type of bond, the investor's tax bracket, and local tax laws.