Bonds are debt market instruments, using which, lender provides funds to the bond issuer. The bond issuer promises to pay back the amount borrowed at the end of the bond period, along with the interest paid at regular intervals. The bond issuer can be a private or a public sector company, a Bank, a non banking financial company or a Government.
1. Better Return at low risk
Bonds fixed income market can provide you returns as high as 9 - 10% per annum or more.
2. Steady income
The Coupon or Coupon rate is the interest rate paid by fixed-interest security such as Bond/Debenture. It is the annual payment towards the face value of a bond. This interest will be credited to the accounts at set predefined frequency
3. Tax Advantage
For interest earned from Taxable bonds, the earnings are taxable. However, for interests earned from Tax-Free Bonds, the earnings are 100% Tax-free. Also, capital gains earned from selling any bonds(Taxable and Tax Free) before maturity are subject to capital gains taxation
1. Government Bonds 2. Corporate Bonds 3. Sovereign gold Bonds 4. Convertible Bonds 5. Municipal Bonds 6. Zero Coupon Bonds
short term bonds- Maturity periods below five years Intermediate term bonds- Maturity period between five to 12 years Long term bonds- Maturity periods exceeding 12 years