Increasing trends toward investment in the stock market encouraged several companies to launch their retail bonds. Investors have been very active since the COVID-19 pandemic, with emerging financial influencers supporting investments in stock markets and blockchain technology rather than traditional fixed deposit schemes. There is no doubt that returns on investment in these options are much higher than conventional techniques like a savings account.
For investors who want to play safely in the field, bonds are one of the safest security in the market. The bonds are rated by the authorized credit rating agencies in India. Credit ratings are the ranking done according to the capacity and track record of the companies by authorized credit agencies. With a reputed financial institution like RURASH, you can get a host of well-researched recommendations on different bonds available for retail investing. This can help you make informed decisions while investing in the bond segment.
Key points to in mind while investing in bonds
Returns: First and foremost, decide your expectations from the market. Investing in corporate bonds with a trusted partner like RURASH can bring you remarkable returns that can go up to 10.25%. RURASH also gives you the option of deciding the payout period as monthly/quarterly/annually as per your financial needs.
Credit Ratings: Investing in the right bonds are bound to bring you higher returns. If you are planning to invest in corporate bonds, a good credit rating is a must. Some trustworthy authorized credit rating agencies in India are CRISIL, CARE, BWR, and ICRA Limited. RURASH helps its client portfolios invest in bonds that have a AAA rating, i.e., the best bonds in the industry.
Assessment of new risks: The risk of non-payment may arise according to the market conditions in the industry. For example, the government is introducing a legal framework for imposing penalties on those companies who are not following rules regarding pollution control. If the government implements those penalties, then the company may derive loss in the said period. Investors need to be aware of current scenarios before investing in corporate bonds.
Different industries have different returns: A company that belongs to the manufacturing industry may give less yield return than the finance industry. Even if they both have an "AAA" rating, they still provide a different return as finance is a service sector industry that bears higher risks than the manufacturing industry. High risk always delivers high returns on investment. In this case, again, you have to determine your risk-taking capacity and invest accordingly.
Bonds with additional features: Some bonds have additional features like a call option, put option, convertible bonds, and many more. If you are looking for security in bonds, then these bonds are not suitable for you. They might expose you to new volatile risks in markets. For example, if you purchase a fully convertible bond, the bond will be converted into equity shares at the end of maturity. If equity is not your cup of tea, there is no point in buying the bond when you are still dealing in a volatile equity market.
Secured or unsecured bonds: While ascertaining your risk appetite, you must consider the fact that bonds can be secured as well as unsecured. If your risk appetite is tight, you must go for secured bonds even though they have less interest rate than unsecured ones. That is how you can pick the proper bond for your hard-earned money to invest.
Investing platforms for bonds
In India, retail investing in bonds is now allowed. If you are a moderate risk taker investor, then you must go for retail investment in bonds. The Prime Minister launched the Reserve Bank of India Retail Direct scheme on November
12, 2021. This scheme allows retail investors to directly invest in G-Sec government securities free of cost.
RURASH is India’s leading platform to buy AAA rating bonds that keeps its clients updated on the latest bond prices. Not only does RURASH help its clients in the bond selection, but it also ensures quick and safe delivery of these bonds to the clients’ demat accounts. With RURASH, you can conveniently invest online in the bonds of your choice, a much-needed facility in these unprecedented times.
How is Bond investing different from Stock investing?
- Bonds are debt instruments while stocks are equity based.
- The risks and returns associated with bonds are comparatively lower than stocks.
- Bonds are issued by government, public, and private corporations and financial institutions, while stocks are issued by public and private corporations.
- Bonds are a safer investment option than stocks, which are completely exposed to market volatility.
- Bonds keep your principal amount safe while giving you an additional interest on it. This is not possible in stock investing, where your entire investment is at risk.
- Bonds give you irregular returns at a stable and predictable rate, also giving you the facility of choosing the payout period as per your financial needs. This feature is not available in stock investing as the returns from stocks are not regular or predictable.
- In case of bankruptcy of the firm, bondholders get a preference over stockholders at the time of repayment through the liquidation of the firm’s assets.
When it comes to bond investments, investors get attracted by the security bonds offer. It is advisable to go for quality, high-yield bonds, as they give you tax-shield benefits along with assured returns. Invest in these top fixed- returns debt instruments with RURASH Financials and stay stress-free about your hard-earned money.