Bonds & FDs

Bonds & FDs

In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds. Bonds can be in mutual funds or can be in private investing where a person would give a loan to a company or the government.

On the other hand, an FD known as Fixed Deposit is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. Bonds and Fixed Deposits (FD's) are widely considered the two most popular alternatives for risk-averse investors across the world. While both bonds and FD's are 'fixed income' instruments in the sense that they offer interest income to investors, they actually differ markedly across various parameters.

Bonds & FDs
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Bonds & FDs

Types of Bonds

Fixed Rate Bonds

In Fixed Rate Bonds, the interest remains fixed through out the tenure of the bond. Owing to a constant interest rate, fixed rate bonds are resistant to changes and fluctuations in the market as the interest rate keeps fluctuationg.

Zero Interest Rate Bonds

Zero coupon bonds are bonds that do not pay interest during the life of the bonds. Zero Interest Rate Bonds do not pay any regular interest to the investors. In such types of bonds, issuers only pay the principal amount to the bond holders.

Inflation Linked Bonds

Inflation-linked bonds, or ILBs, are securities designed to help protect investors from inflation. Bonds linked to inflation are called inflation linked bonds. The interest rate of Inflation linked bonds is generally lower than fixed rate bonds.

Subordinated Bonds

Bonds which are given less priority as compared to other bonds of the company in cases of a close down are called subordinated bonds.

Bearer Bonds

Bearer Bonds do not carry the name of the bond holder hence anyone who possesses the bond certificate can claim the amount. Hence this is known as bearer bond.

Climate Bonds

Climate Bonds are issued by any government to raise funds when the country concerned faces any adverse changes in climatic conditions.

Benefits

Online & Offline Application

To ensure the application to such bonds it is easy for all types of investors, as the Government has provided two options for investments. For tech savvy investors, banks offer online application.

Mode of Payment

The subscription in these bonds is allowed by paying in cash, demand draft, cheque, or any electronic mode of payment. This makes it easy for the investor to invest funds in this bond.

Fast Online Process

Forget visits to any branch or a lengthy documentation process. With us you just need to submit documents and keep track of your fixed deposit account online. Seamless and hassle-free!

Choice of Income

An investor can choose to receive interest income or choose the cumulative option and receive amount on maturity. For those who choose the income option, interest is paid twice a year, every six months.