Our There are many options available for investment in the country. Generally, people’s attention for investment first goes to bank FD, where fixed and guaranteed returns are available. After bank FD, people turn to mutual funds, where there is a lot of risk due to movements in the stock market. Bank FD has low returns and low risk, whereas mutual funds have high returns and high risk.
Now here comes a big question whether we have any such option where there is moderate return and moderate risk – i.e. higher returns from FD and less risk from mutual funds. So the answer to this question is- Yes. If you are looking for an investment option where there is higher return than FD and less risk than mutual fund, then the best option for you is – Bond.
what is a bond
Bond is a fixed return income source. Apart from governments, private companies also issue bonds. When the government or a private company needs money, they issue bonds. These bonds come with a fixed return rate and fixed tenure.
Is it profitable to invest in bonds
Companies issuing bonds in India usually offer returns between 7 to 14 percent depending on their needs. These are fixed returns offered by companies, that is, you will get a fixed return on investment. Statistics show that investors have earned returns ranging from 9 percent to 12 percent by investing in bonds. That means in this you get much better returns as compared to bank FD.
Is it safe to invest in bonds
In terms of risk, there are two types of bonds – secured bonds and unsecured bonds. Secured bonds are completely safe and investing in them is completely safe. Actually, such bonds come with collateral. That is, the company pledges something as security to repay the money it is taking from you, which can be confiscated in circumstances like default. Whereas there is a lot of risk in unsecured bonds because in this the company does not pledge anything of its own. If you are investing in an unsecured bond and that company defaults, your money will be lost.
