IS BOND A BENEFICIAL INVESTMENT?

 Sometimes we look for any other option than the stock market to invest our money for diversification and safer investments. There are different options for investments for keeping the money safe and getting fixed returns. But are these fixed returns up to the mark? Is there any investment option where we can get more returns as compared to FDs? 

The answer is YES. These kinds of investments are called BONDS. But how do bonds work and how it is beneficial?

So, let's check IS A BOND BENEFICIAL INVESTMENT?

What is Bond?

A bond is an investment where the investor gets fixed returns yearly, half-yearly, or quarterly. Here the government or any organization borrows the fund from the public for a certain period and gives them interest till the Maturity date. Here, the investors receive the interest on the principal amount during the period and after the maturity of the bond, the principal amount is returned to the investor by the organization.

What are the types of Bonds?

Bonds are mainly of 3 types i.e.

1) Corporate Bonds:-  When a company needs funds for their business and they want to save cash, they issue bonds for 7%-10% which is lower than a bank loan. The corporate companies pay the interest to the public who invested in the bond instead of a loan. In short, Corporate companies takes a loan from the public.

2) Government Bonds:-  When Government needs funds for any project like the construction of a Dam, Road, or when the government needs cash for any transaction. The government borrows the money for a certain period of time and pays them the interest and returns the principal amount at the Maturity Date.

3) Municipal Bonds:-  These bonds are similar to Government Bonds, these are just issued by the Municipality Corporations. 

How to invest in Bonds and How it is beneficial?

There are so many different platforms available in India to Invest in Bonds, you can choose any platform you want but KOTAK CHERRY is a platform where you can start investing with just ₹1,000/-. 

Bonds are mostly used by investors to hedge their investments and keep some portion of their investments safe. It helps to generate fixed income for the investors irrespective of how the stock market is performing. It does not matter whether the market is performing well or not, the investor will receive the interest for sure.

If you are reading this blog first time then let me introduce myself, My name is Akash Founder of Finance Talks with Sky. I share information about personal finance, the stock market, and a lot more. To know more about finance and stock markets do follow Finance Talks with Sky.

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