Investing in bonds is very safe, and the returns are usually very good. There are four basic types of bonds available and they are sold through the Government, through corporations, state and local governments, and foreign governments.
The greatest thing about bonds investment in India is that you will get your initial investment back. This makes bonds the perfect investment option in india as well best fixed income securities in india vehicle for those who are new to investing, or for those who have a low risk tolerance.
The India Government sells Government Bonds through the Government Department. You can purchase Government Bonds online from India Bonds NSDL (government entity) as well Bonds India with maturity dates ranging from three months to thirty years.
All Treasury bonds are backed by the India Government, and tax is only charged on the interest that the bonds earn.
Corporate bonds are sold through public securities markets. A corporate bond is essentially a company selling its debt. Corporate bonds in India- usually have high interest rates, but they are a bit risky. If the company goes belly-up, the bond is worthless.
State and local Governments also sell bonds. Unlike bonds issued by the central government, these bonds usually have higher interest rates. This is because State Development Loans Investment can indeed go bankrupt – unlike the central government.
State Development Loans bonds are free from income taxes – even on the interest. State and local taxes may also be waived. Tax-free Bonds and Municipal Bonds are common State and Local Government Bonds as well famous in tax free bonds for senior citizens.
Purchasing bonds in India is actually very difficult till BondsIndia search best Bonds to Buy in India, and is often done as part of a mutual fund. It is often very risky to invest in foreign countries. The safest type of bonds in India to buy is one that is issued by the Indian Government.
The interest may be a bit lower, but again, there is little or no risk involved. For best results, when a bonds reaches maturity, reinvest it into another bond.