Your Financial Goals, Time Horizon, and Risk Profile are the main determinants that help you select the right bond for your investment portfolio. If your time horizon allows, you can invest in tax-free bonds like municipal and Government bonds to save taxes.
Answer these three questions while choosing a bond:
- Do you want regular income or investing for long-term growth?
- How long do you intend to keep your funds invested?
- How comfortable are you with risk?
Bonds have a rating outlining their ability to pay principal and interest. It’s better to consult investment experts besides checking ratings to determine the worthiness of a bond.