Investing money in bonds can be complicated if you are not provided the right assistance and guidance. Identifying the right company to invest in their bonds is very important as your money depends on this decision. Here we are with every piece of information about bonds and investments which you need to know before stacking your money.
There are various companies & organizations that issue bonds to raise money from investors willing to lend them money over a period of time. When you buy a bond, you are lending money to the issuer, which may be a government, municipality, or corporation company.
Features of Investing in Bonds
- They provide a predictable income stream. Investing in bonds can pay you interest twice a year.
- If the bonds are held to maturity, bondholders get back the entire principal, so bonds are a way to keep safe the capital while investing.
- Companies, governments, and municipalities issue bonds to get money for various reasons-
- Increasing cash flow
- Financing debt
- Funding capital investments in schools, highways, hospitals, and other projects.
Types Of Bonds
- Corporate bonds
A corporate bond is issued by a corporation to raise financing for a variety of reasons such as ongoing operations, or to expand the business. Corporate bonds are usually longer-term debt instruments, with a maturity of at least one year.
- Government Securities
Government Securities are bonds issued by governments or entities they create such as authorities when a government body wants to raise funds for projects such as infra-related, roads, airports, railway stations, schools, and so on.
- Savings bonds
Savings Bonds are one of the most preferred investment options for people looking for a fixed income source. These bonds are convenient to invest in and offer a 7.75% interest rate for the amount invested
- Sovereign Gold Bond
The Government of India also issues sovereign Gold Bonds. Gold bonds are in form of security as it in the form of the Government of India stock. It also carries an interest rate that is paid regularly and has zero risk of handling that exists in physical gold.
Benefits of Investing in Bonds
- Bonds provide a higher interest rate on the investment.
- Investment in bonds is relatively safer than other investments.
- Bonds keep safe your principal Investment, unlike stocks.
- Investment in bonds Offer Tax advantages.
- Stable and good investment income.