What are bonds? Should we invest in bonds or not? All about bonds.

 

If you also invest in FD then you should invest mainly in BONDS. In BONDS your return is better than FD but in BONDS mainly your monthly income starts. We know how all this will happen. How to invest in BONDS, how risky it And how much return do you get in this? 

How to invest in BONDS

Now after hearing all this you must be feeling like investing, earlier it was very difficult to invest in bonds. But now it is not difficult to invest in it, you just have to follow different steps for different types of investments. Bonds can be bought through a broker, an ETF or directly from the government. Buying and holding to maturity is one strategy for investing in bonds. Another is to sell early and make a profit. Before you buy, be sure to check the bond's rating to learn about its financial health.Now let us move on to our next topic.

What is rating in bonds

Bonds are rated by the credit rating system. Rating lets you know how safe the company you are investing in is. This rating is given by CRISIL. If you are a beginner then you do not know in which company to invest.If you suck the wrong companies, your investment may also sink.In this you have ratings of AAA, AA, BBB, BB, C and D. If you are a beginner then you should invest in  AAA or AA, the risk in it will be negligible.

Types of BONDS

Now we know why companies and governments issue bonds and what are their types.Companies and governments issue bonds to raise money from people to complete their projects. Governments launch bonds to raise funds for schools, roads etc. and companies launch bonds to expand their business or complete profitable projects. Bonds are divided according to sectors. Just as a coin has two sides, similarly bonds are both safe and risky.

1.State development bond:- i.e. state government bonds. Now everyone knows that if the government does not go bankrupt then these bonds are considered the safest. 

2. public sector Undertaking Bonds:- In these bonds, the government invests in the majority, hence these are also considered as safe bonds.

3.Corporate bonds/private bonds :- These include bonds of all private companies, although they are considered risky but they also include some trusted names which are Tata etc.Although some of these are profitable companies, there are more chances of fraud in them. 

Returns earned from bonds

Now we know whether you will get returns on how much you invest depends on some points. 

1. phase value :- Phase value is the value at which the company releases the bonds.                   

2. Coupon rate:- The value you get every year on your investment is called coupon rate.

3.Tenure:- This tells you after how many years you will get the money from your investment.

4. Credit Rating:- This tells you how trusted is the company in which you are investing.

Last but not least, what are bonds?

Bonds like this are for the companies, not for you. Just think if the companies have to do any big project then we will either take back the loan or save our shares. But in both these companies there is something loose. If the company sells its shares then only a few shares are left.  The new shareholder who is appointed will have his own say in the company's decisions. Which can sometimes be detrimental to the company. Or if the company takes loan from back then they will have to pay interest up to 12%-13%. Therefore, companies find a middle path and issue bonds so that they can take money from the people without selling their shares. If we invest in FD then we get 6-7 percent interest but in bonds we get up to 9 percent interest. This also benefits the companies and our companies also have to pay less interest and we get more interest from the bank 

Stay safe, stay healthy

                                  Writer:- Tarun Sinhmar