What are investment bonds?
Investment bonds in India are debt instruments issued by companies or governments to raise capital. These bonds are essentially a loan made by the investor to the issuer and offer a fixed interest rate that is paid periodically. Bonds are considered a low-risk investment option as they provide a predictable return on investment. However, there is still a risk of default, which means the issuer may not be able to repay the principal and interest owed to the investors. In India, investment bonds can be issued by the government, public sector undertakings, banking and financial institutions, and corporations. Overall, investment bonds can be a suitableinvestment optionfor those who prioritize safety and predictability over potential high returns.
Features and benefits of investment bond
An investment bond is also an excellent option for those looking to reap tax benefits and grow their savings. Read on to know more.
- These bonds provide scope for capital appreciation so that you can make substantial financial gains
- The interest rate on these bonds is much lower than that offered by fixed deposits
- The returns from investment bonds aren’t subject to TDS or even tax. This means that you can keep most of your income from the interest gains without planning for tax deductions
- These bonds can be sold to another party later
- Investment bonds may or may not have flexible tenors
- These bonds do not let you choose the frequency of your returns. Instead, there is a fixed time when your returns will be paid to you
- Bonds are secured but not insured. This means that you do not have absolute safety. In case a bond goes unpaid, you only have rights over the assets submitted as collateral
So, if you seek an investment option that is secure and gives assured returns, a fixed deposit is an ideal investment option.Bajaj Finance Fixed Depositis an excellent option for growing their savings in a safe avenue.
Here’s what makes a Bajaj Finance FD a preferred option to grow your savings:
- Highest safety ratings of CRISIL AAA/STABLE and [ICRA]AAA(Stable)
- Lucrative interest rates up to8.85% p.a.
- Flexible tenors ranging from 12 to 60 months, with the option to receive pay-outs periodically or at maturity
- End-to-end paperless online FD process to enable you to invest from the comfort of your home
- Monthly savings option with Systematic Deposit Plan that enables you to save with just Rs. 5,000 per month and grow your savings easily
You can easily calculate the interest returns with the help of Bajaj FinanceFD Calculator.
By investing in a fixed deposit, you can get assured returns without market forces. Make a wise investment choice with Bajaj Finance online FD and grow your savings effortlessly.
Fixed Deposits vs Investment Bonds
Aspects | Bonds | Fixed Deposits |
Definition | It is a financial means through which companies and government bodies raise funds for their operations. The investors get regular interest income, and the principal amount is usually payable on maturity. | It is a financial instrument where the investor deposits money for a specific period to earn a predetermined interest rate. |
Issued by | Bonds are issued by municipalities, state governments, central governments, private companies, and PSUs. | FDs are provided by post offices, banks, and Non-banking Financial Companies (NBFCs). |
Liquidity | Listed Bonds are traded on the stock exchange, which enhances their liquidity. | Investors are free to withdraw the FD before maturity. But, such withdrawal leads to reduced interest rates or penalty charges. |
Frequency of payout | Investors are not free to choose the frequency of payout as dictated by the bond’s term structure. | Investors are free to choose the frequency of payout. |
Returns | Bonds generally offer higher returns than FDs. | FDs offer a fixed return on investment. |
Frequently asked questions
What is the Digital FD offered by Bajaj Finance?
Bajaj Finance has launched a new FD type called "Bajaj Finance Digital FD" for a period of 42 months. Bajaj Finance is providing one of the highest interest rates of up to 8.85% p.a. for senior citizens and for the customers below the age of 60 they are providing up to 8.60% p.a. The Digital FD can be booked and managed only through the Bajaj Finserv website or app.
What is the difference between a bond and a deposit?
Bonds are debt securities issued by entities to raise capital, while deposits typically involve individuals or institutions depositing money with a financial institution for a fixed term, usually with interest.
Which is better - corporate fixed deposit or corporate bond fund?
The choice between a corporate fixed deposit and a corporate bond fund depends on individual risk tolerance and financial goals. Fixed deposits offer fixed returns with lower risk, while bond funds provide diversification but can be subject to market fluctuations.
Which mutual fund is best large, mid, or small cap?
Bonds represent debt instruments issued by entities, fixed deposits involve depositing money with financial institutions for a fixed term, and debt mutual funds pool investors' money to invest in a diversified portfolio of debt securities, offering varying risk and return profiles.
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