Bonds

Bonds

👉 A Bond is a type of investment where you lend money to a government, corporation, or organization for a fixed period in exchange for regular interest payments.

When you buy equity shares, you become a partial owner of the company and have a claim on its profits and assets.

Why Invest in Bonds?

• Fixed and predictable returns (good for conservative investors)
• Lower risk compared to equities
• Helps in regular income generation
• Good portfolio diversification tool

Featuers Of Bonds

• Fixed Income – Bonds pay regular fixed interest (coupon) over the tenure.
• Principal Repayment – The full invested amount (principal) is returned at maturity.
• Low Risk (Compared to Stocks) – Generally safer than equities, especially government bonds.
• Credit Ratings Matter – The safety of bonds depends on the issuer’s credit rating.
• Tenure (Maturity Period) – Fixed duration (e.g., 1 year, 5 years, 10 years) until repayment.
• Interest Rate Sensitivity – Bond prices fall when market interest rates rise, and vice versa.
• Government & Corporate Issuers – Issued by governments (sovereign bonds) or corporations (corporate bonds).
• Lower Returns than Equity – Generally offer lower returns but more stability than stocks.
• Inflation Impact – Fixed interest may lose purchasing power in high inflation periods.