What are Corporate Bonds? How to invest in Corporate Bonds?
The bonds issued by corporates are called Corporate Bonds. Corporates offer higher yields than Government Bonds (G-sec bonds). Corporate bonds with “A-grade” ratings or above by credit rating agencies are considered safer instruments for investing.
How to Invest in Corporate Bonds in India?
One must have a Demat Account to be able to invest in bonds in India. You can talk to your broker or bank to get access to bonds and then invest in them. The process is mostly manual and involves considerable time. If you want to have a completely seamless and hassle-free online investment experience with bonds, there are online platforms for investing in bonds. Some platforms are known for their vast collection of good quality bond papers, transparent process, and easy online experience where you can invest in bonds with 3 simple steps.
- Step 1: Upload your documents online and complete the KYC
- Step 2: Choose the bonds that match your investment goal
- Step 3: Pay online and receive bond units in your Demat account
Investment in bonds is advantageous to customers in extensive ways. Due to the dependability of interest and principal returns, bonds have proved to be a stable investment option for customers averse to excessive risk in the market.
Salient Features of Corporate Bonds
- Bonds are known for fixed returns. They are short, medium, and long-term investment tools that entail assured returns, with a low-risk proposition.
- Bonds offer a legal guarantee wherein the borrower is bound to return the principal amount to the creditors. Moreover, in the event of bankruptcy of the borrower, bondholders precede shareholders in receiving debt repayment.
- While bonds are low-risk, they also offer lower returns as compared to other risky investment alternatives such as equity mutual funds and direct equity.