What is Bond explained everything About bonds you need to know

What is Bond, how to Invest in Bonds, what is debenture, What is Types of Bonds, how buy and sell Bonds.
What is Bond full explained about Bonds.

In this article today, we will talk about bonds and know what bonds are and how to invest in them. What should you know before investing in bonds, everything will be known in this post.

Bonds and debentures are such sources of fixed income by investing in which you can earn a fixed amount with less risk. Investing in bonds means lending money to a private company or government, in which it pays you interest according to the interest rate already set.

feel free to check out table of content given below to jump around the area of your interest in this article.

So without losing any time let's first know what is Bond.

What Is Bonds.

Whenever government institutions or private companies require loans, they issue bonds. These bonds are for the general public and industrialists, anyone can buy them.

Whenever a private company or government institutions takes a loan from the general public, then an agreement paper is given. In which information is written about the loan amount and the time to repay the loan in future. And that agreement paper is called bond.

Also Read - check out our Beginners Guide - What is Stock Market where we had shared Detailed information about stock market.

Types Of Bonds

As I have already told you that bonds are a source of earning a fixed amount and an investor gets a fixed interest by investing in bonds. The following types of bonds and few types of bonds are given below.

1). Government Bonds - 

When the government requires a fund to carry out some work, it issues bonds to collect this fund and is issued by the government. That is why bonds are called government. And there is less risk in government bonds. You get your money invested in this type of bond on time.

Government is considered more secure and reliable, your money does not drown in it. Since RBI issued stamps on bonds issued by the government.

The government also encourages people to invest in bonds so that people put their money in bonds, not hoarding money and destroying its value. And that's why the government gives many types of tax rebate on government bonds.

2). Corporate Bonds - 

Corporate funds can be issued by any company. The company collects funds to increase its circulation and for this companies issue bonds. And such bonds are called corporate bonds.

Any person can buy corporate bonds. But since these are private company bonds. That is why there is a lot of risk in them, they have more risk than government bonds.

3). TAX Saving Bonds.

Such investors should invest in such bonds, who want to invest for a long time. And want to save your money from tax.

Those people invest more in tax saving bonds, who are always looking for attractive ways to avoid the tax on their money every moment. 

4). Zero Coupan Bonds - 

In such bonds you are not given any kind of coupan or interest on the bonds you have purchased.

But you are given 20 thousand bonds by the company for 19 thousand. And when the maturity period ends, then the company buys your bonds for 20 thousand rupees, this gives you a profit of 10%.

Although there are many other types of bonds available in the market, but these are the most popular and common types of bonds in which most investors like to invest. That is why we have given you brief information about these four types only.

Also Read - check out our Beginners Guide - What is Stock Trading. where we had shared Detailed information about stock trading.

What is Coupan in bonds.

If you are going to invest in bonds then you must have heard about coupan many times but do you know what are bonds? If not, let's know what coupons in bonds are called.

Whenever you buy bonds from a company, that company gives you the interest of that bond twice a year and this interest in bonds is called coupon.

How To Buy Bonds In India.

There are two ways to buy bonds in India. If you want to buy bonds within India, then you can invest in bonds in the following two ways.
  • Primary Market 
  • Secondary Market 

1). Primary Market - When an organization issues bonds to collect capital for the first time. Then a public offer (invitation) is issued at that time. In which the general public is also given the opportunity to buy bonds. Where they can fill the form and apply for bonds.

2). Secondary Market - When bonds are sold once. After this, they are bought and sold by the public in the stock market.

If you want to invest in bonds, then you should invest in debt mutual funds , because 80% of the money of debt mutual funds is invested in bonds.

Conclusion -

- If you want to get decent return with less risk then you can invest in bonds. But one thing you always have to keep in mind is that any kind of investment, there is risk in it.

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