Bonds are an easy way for investors to gain high returns on the go. Bonds are debt instruments in which the authorized issuer owes the bond holders a debt. Depending on the terms of the type of bonds, the authorized issuer is obliged to pay interest and/or repay the principal at a later date upon maturity. In simpler terms, a bond is a formal contract to repay borrowed money with an interest at fixed intervals. Investment bonds are a way to raise money. When you purchase any type of bond (government, convertible, callable, etc.), you are lending money to the issuer which may be a corporation, the government, a federal agency or any other entity. In return, the issuer promises to pay a specified rate of interest during the life of the bond. The issuer also repays the face value of the bond when upon maturity of the term.
Learn about different types of bonds and find suggestions for best bonds to invest in!
There are different types of bonds like:
- Zero coupon bonds
- G-sec bonds
- Convertible bonds
- Inflation linked bonds
- Sovereign gold bonds
- Capital Gain Bonds
Key benefits of investing in bonds
- Capital Preservation- Your money is protected to a greater extent as investing in bonds involves lesser risk
- Steady Income- The returns from investment bonds are assured although it is lesser as compared to equity
- Tax Advantage- Tax Free investment bonds are one of the best options for you if you fall in the higher tax bracket