Corporate bonds have emerged as an attractive investment option in India, offering investors a balance between risk and return. These fixed-income securities, issued by corporations to raise capital, provide a viable alternative to traditional investment instruments such as fixed deposits and equity markets.
One of the primary reasons investors consider corporate bonds is their potential for higher returns compared to bank fixed deposits (FDs). While FDs typically offer interest rates in the range of 5-7% per annum, corporate bonds, especially those issued by companies with good credit ratings, can provide 8-14% returns, depending on the issuer’s financial health and market conditions.
Benefits of Bond investments
Higher Returns Compared to Fixed Deposits
As explained above, for investors seeking a stable yet lucrative fixed-income option, corporate bonds offer an edge over traditional fixed-income products.
Regular Income Through Interest Payments
Corporate bonds provide investors with periodic interest payments (coupon payments), which can be monthly, quarterly, semi-annual, or annual. This feature makes them a preferred investment for those seeking a steady income stream, such as retirees and conservative investors.
Portfolio Diversification
Diversification is a crucial aspect of risk management, and corporate bonds help investors achieve a balanced portfolio. By investing in corporate bonds along with equity, and mutual funds, investors can reduce overall risk while maintaining stable returns.
Lower Risk Compared to Stocks
While stock investments offer high growth potential, they come with substantial volatility and unpredictability. Corporate bonds, especially those rated AA and above by credit rating agencies such as CRISIL, ICRA, and CARE, are relatively safer investments.
Investment-grade bonds (AAA, AA ratings) ensure lower risk and stable returns. Even lower-rated bonds offer higher yields, but they come with increased risk.
For moderate-risk investors, corporate bonds strike the right balance between safety and returns compared to stocks.
Liquidity and Tradability on Exchanges
Corporate bonds are traded on stock exchanges such as the NSE and BSE, providing investors with liquidity. Unlike traditional fixed deposits, which often have penalties for premature withdrawal, corporate bonds allow investors to sell their holdings before maturity in the secondary market.
Bond investing through Bondbazaar.com
Investing in bonds through Bondbazaar.com offers a streamlined and user-friendly experience for both novice and seasoned investors. Bondbazaar.com is India’s first real-time bonds trading platform, providing access to a wide range of bonds, including government and corporate securities. The platform is designed to offer a seamless trading experience, allowing users to buy and sell bonds with ease.
All the purchased bonds are kept in DEMAT format, without the need of any physical Bond certificate. Investors can sell those bonds directly through NSE/BSE from their DEMAT account, anytime they want just like how stocks bought and sold.
Invest through us
As partner of Bonbazaar.com , we can guide you to choose the right Bond suitable for your risk profile and return expectations. We also help you in creating Bondbazaar account as well as opening Free DEMAT account in Bondbazaar.com, which enables you to invest in all listed Bonds.
India Investment Corner 