Bonds are fixed-income instruments that represent a loan made by an investor to a borrower, typically a government, corporation, or financial institution. In return, the issuer agrees to pay:
Regular interest (called a coupon)
Principal repayment at maturity
They are considered a lower-risk investment compared to equities, offering predictable income.
Bonds can be a smart choice for:
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Capital preservation
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Steady income through interest
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Portfolio diversification
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Lower volatility compared to stocks
They are especially suitable for conservative investors, retirees, or anyone looking to balance risk in their portfolio.
| Type | Description |
|---|---|
| Government Bonds (G-Secs) | Issued by the Government of India; considered very safe. |
| RBI Bonds / Savings Bonds | Issued by the Reserve Bank of India; usually have fixed returns. |
| Corporate Bonds | Issued by private/public companies; offer higher returns, with credit risk. |
| Tax-Free Bonds | Issued by government-backed entities; interest earned is tax-free under Section 10(15)(iv)(h). |
| Municipal Bonds | Issued by urban local bodies for infrastructure development. |
| Green Bonds | Issued to fund environmentally sustainable projects. |
You can invest in bonds through:
Online bond platforms
Stock exchanges (BSE/NSE debt segment)
Registered brokers and wealth managers
Mutual funds or ETFs that invest in bonds
RBI Retail Direct portal (for government bonds)
Minimum investment amounts vary by bond type and issuer.
Government bonds are considered extremely safe.
Corporate bonds carry credit risk, so always check the credit rating (AAA is safest).
Liquidity risk can be an issue—some bonds may be hard to sell before maturity.
Interest rate risk: Bond prices fall when interest rates rise.
Interest earned on most bonds is taxable as per your income tax slab.
Capital gains (if bonds are sold before maturity) may be taxed as per applicable rates.
Tax-Free Bonds: The interest is completely exempt from tax.
