Bonds

Debentures

Debentures are a type of debt instrument that usually offers investors a higher rate of return than other types of debt and fixed income products. However, debentures are typically unsecured, carrying a higher risk than secured debt.

Why invest in debentures?

Leading enterprises issue debentures to raise funds for their business needs. Investors earn interest on their investments in debentures. Debentures are typically unsecured, so investors can expect a higher interest rate. Top-rated debentures issued by good companies are relatively safe and can provide investors with a steady income.

Here are some of the top reasons to consider debentures:

Higher rate of return than other debt and fixed income products
Liquid as they can be traded on the stock exchanges
Top-rated debentures are usually safe
There are many types of debentures (convertible, partly convertible, fully convertible, optionally convertible and non-convertible debentures) that offer investors a lot of choices and flexibility while investing.

Corporate Bonds

Why invest in Bonds?

Corporate bonds are secured loans, which means all loans are backed by collateral. This feature significantly lowers the risk of an investor. Many corporate bonds tend to offer better yields than government bonds.

Security

Most corporate bonds are backed by assets, which provides investors an additional layer of protection.

Liquidity

Corporate bonds are tradeable on the exchanges and don’t have a lock-in period.

Returns

Enjoy fixed returns and potential for capital gains.

Credit ratings

Corporate bonds are rated by top credit rating agencies, allowing you to make better choices.

Taxation

Listed corporate bonds do not attract TDS.

Choice

Corporate bonds come in many varieties, including tax-free bonds, perpetual bonds, zero-coupon bonds, and commercial paper (bonds with tenures lower than one year). So, you can invest in a bond that meets your needs.

Government Securities

Corporate bonds are debt instruments through which companies raise funds for a variety of reasons, including ongoing operations, M&A, or to grow business.

Government securities are sovereign debt instruments and could be in the form of treasury bills (T-bills) or bonds. Central and state governments issue G-Secs to raise funds from the public. Since they are sovereign-backed, they carry no credit risk but are subject to interest rate risk.

Why invest in government securities

G-Secs can help you reduce the credit risk of your portfolio. G-Secs come in a variety of maturities and types, including floating rate bonds that allow you to hedge against interest rate risk.

Low risk

G-secs carry zero credit risk as they are backed by the government (which means if you hold the security to maturity, your capital and the interest are safe).

Higher returns than FDs

Average returns from G-secs tend to be higher than bank FDs.

Wide-ranging tenures

You can choose between T-bills (with tenures as short as 91 days) or government bonds (with tenures ranging from 5 to 40 years).
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