Popular Bonds Available In Market
The Benefits of Investing in Bonds
Bond investment provides an income stream that is easily predictable. If the bondholder holds the bond till maturity, the investor gets the entire principal amount and hence these are considered an ideal way to preserve one’s capital.
Bonds Provide Income
A strong bond portfolio can provide decent yields with a lower level of volatility than equities. Th...
Bonds Offer Diversification
As time goes on, greater diversification can provide you with better risk-adjusted returns than narrow portfolios can. In other words, it reduces the ...
Better than the Bank?
The interest rates on bonds are typically greater than the deposit rates paid by banks on savings accounts or fixed deposit accounts. As a result, if you are saving and you don’t need the money in the short term (in a year or less), bonds will give you a relatively better return without posing too much risk.
Select Bonds Offer Tax Advantages
Certain types of bonds can also be useful for those who need to reduce their tax burdens. The income on bank instruments, most money market funds , an...
Bonds Preserve Principal
Fixed income investments are very useful for people nearing the point where they will need to use th...
BONDS/NCDs VS MUTUAL FUNDS
| Area of Consideration | Bonds | Mutual Funds |
|---|---|---|
| Ownership | Investors are not offered ownership in a firm. | Similar to bonds, investors do not own a stake but units of a scheme. |
| Duration | Duration can be short-term and long-term. | Duration can be short-term and long-term. |
| Returns | The principal amount, as well as the interest applicable on bonds, is fixed. | Returns are linked to the performance of the markets and portfolio composition of the particular fund. |
| Safety | Bonds being commitments are relatively safe investments. | Due to their nature of being linked to the market, there is an equal probability of erosion in investment value. |
| Risks | Investors will be provided with fixed returns. There are no risks involved. | Mutual funds can provide high or modest returns. Schemes with higher returns usually involve higher risk, while lower-return schemes carry fewer risks. |
BONDS / NCDs VS FIXED DEPOSITS
| Nature | A bond is a debt instrument that represents a loan to the borrower by the investor. | A fixed deposit is a financial instrument where the investor deposits money for a specific period. |
| Interest Payment | The investors get regular interest income in return, and the principal amount is payable on maturity. | The principal and interest, both are payable on maturity. |
| Safety | Bonds are considered safe instruments as physical assets back them. | FDs are also safe instruments but physical assets do not back them. |
| Tradeability | Bonds are traded on a stock exchange, and hence they are a more liquid asset. However, interest rate movements can impact bond prices. Therefore, liquidity comes with the cost of market volatility. | Investors can prematurely withdraw from their fixed deposits. However, premature withdrawal attracts charges or reduced interest rates and penalties. |
| Nature of Return | Bonds can offer higher returns than FD. | FD guarantees a fixed return to its investors. |
| Accessibility | Bonds are not easily accessible to retail investors. Investors can buy bonds over the counter, thus making it often difficult for retail investors to invest. | Investors can easily and instantly open a fixed deposit account with any bank. |
| Priority | If the company goes bankrupt and gets liquidated, the bondholders will be the first to receive their payments, subject to the category of bonds. | FDs are not backed by assets; however, they are insured up to Rs. 5,00,000 under a prescription by RBI. |
| Transferability | Bonds being negotiable instruments can be easily transferred. | FDs not being negotiable instruments cannot be transferred. |
| Taxation on Interest | There is no tax on interest income with tax-free bonds issued by government institutions. | Interest on fixed deposits is subject to income tax. |
Simple step to buy a bond from
Secondary Market
Select Bond / Bonds
Select a bond which meets your requirements. Know more about the bond in detail by enquiring about the issuer, going through IM, studying ratings, and so on.
Contact Relationship Manager
Contact Relationship Manager who will help you in completing the bond-buying process from the Secondary Market.
Deal Slip
On your confirmation, a deal slip will be generated. The deal slip contains details about the bonds viz ISIN, Coupon, Interest Payment Date, Maturity Date, Deal Date, Settlement Date, Price, Accrued Interest, Total Consideration, etc.
Confirmation
Read and confirm the details over the deal slip.
Submit Deal Slip
Submit signed deal slip with copies of relevant documents viz PAN, CML, and Bank account details with the Relationship Manager.
Payment
Pay the settlement consideration to settlement agency Indian Clearing Corporation Limited (ICCL) or National Securities Clearing Corporation Limited (NSCCL) into their account.
Share payment details with the Relationship Manager.
Check the stock in your Demat Account the following day.
Bonds From
Reputed Corporates
We deal in bonds of reputed
corporates sourced from secondary market.
Frequently Asked Questions
A bond is a debt instrument in which an investor loans money to an entity (typically corporate or government) that borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are issued by companies (corporates), municipalities, states, and sovereign governments to raise money to finance a variety of projects and activities. Owners of bonds are debt holders, or creditors, of the issuer.
The accrued interest on a bond is the amount of interest accumulated on a bond since the last coupon payment.
Coupon frequency refers to how often interest payments are made to the bondholder during the life of the bond.
Face value is the amount that is to be paid to an investor at the maturity date of the security. In India the typical face value is ₹100. The face value is also known as the repayment amount. This amount is also referred as redemption value, principal value (or simply principal), maturity value or par value.
The date when the principal (face value) is paid back. The final coupon and the face value of a debt security is repaid to the investor on the maturity date. The time to maturity can vary from short term (1 year) to long term (40 years).
The remaining period until maturity date of a security is its residual maturity. For example, a security issued for an original term to maturity of 10 years, after 2 years, will have a residual maturity of 8 years.
The annual percentage rate of return earned on a security. Yield is a function of a security’s purchase price and coupon interest rate. Yield fluctuates according to numerous factors including global markets, the economy, rating and performance of the issuer.
Yield to maturity is the total return one would expect to receive if the security is being held until maturity. Yield to maturity is essentially the discount rate at which the present value of future payments (investment income and return of principal) equals the price of the security.
Maturity: Maturity is important because this determines the extent of risk an investor is exposed to – normally higher the maturity, higher the interest rate risk or market risk. Coupon: A coupon is the rate of interest paid on debt security i.e. bond is calculated on the basis of the security’s face value. The coupon rate of the bond is equally important for the investor as it affects the total return from the bond. In order to determine which bond to buy, the investor must look at the Yield to Maturity (YTM) of a bond. Thus, once the maturity and yield (YTM) is decided, one may select a bond.
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