Meaning of Bonds
- Bonds are debt instruments where the bond issuer is bound to repay the bond purchaser the principal amount plus a pre-decided rate of interest, as per the terms of the payment of the bond period.
- An investor can increase his allocation in the debt space by investing in bonds with a good credit rating.
- Fortitude helps in selecting a suitable bond for you as per your requirements while keeping in mind the bond’s issuer, coupon rate, credit rating and tenure.
Types of Bonds
- Corporate Bonds: These are issued by private corporates and are available for different tenures and coupon rates. They can be invested in for annual interest payouts.
- Government Bonds: These are issued at a fixed rate and backed by the Government of India. Being a secured return, the rate of interest maybe comparatively lower.
- Tax-Saving & Tax-Free Bonds: These are issued by the government/railways/NHAI, etc for providing tax-saving to investors. They are for a longer tenure but provide tax exemptions along with normal rate of interest.
- Capital Gains Bonds: An investor can remove his tax burden on long-term capital gains arising on sale of any asset, if the amounts are invested in certain specific bonds like Rural Electrification Corporation (REC) and National Highway’s Authority of India (NHAI).