Bonds are debt securities that are issued by companies, governments, and other organizations to raise capital. When you buy a bond, you are essentially lending money to the issuer in exchange for a promise. To pay interest on the borrowed funds and to return the principal amount on a specified maturity date.
Bonds usually have a fixed maturity date, which means they have a predetermined time frame. When the borrower must pay back the loan. The interest rate paid by the borrower is also fixed at the time of issuance, but this rate. Can vary depending on the creditworthiness of the borrower, prevailing market interest rates, and other factors. Bonds gives better interest rates more than EPFO.
Bonds are less risky than stocks because they offer a fixed income stream. And are typically backed by the creditworthiness of the issuer. However, bonds are not completely risk-free. As the issuer may default on its debt obligations or the market interest rates may change. Which could affect the bond’s value. Overall, bonds are an important investment option for investors looking for a fixed-income stream and a relatively lower-risk investment opportunity.
Here are the steps to buy bonds in India
Open a Demat Account: The first step is to open a Demet account with a Depository Participant (DP) of your choice. This account will hold your bond investments electronically.
Choose the Bond:
Decide which bond you want to buy. You can buy government bonds or corporate bonds.
Check the Bond Price:
Once you have decided on the bond you want to buy. you need to check the price of the bond. The price of the bond is usually quoted as a percentage of the face value of the bond.
Place the Order:
Once you have decided on the bond and checked the price. You can place your order with your broker or DP. You can place your order online or offline.
After you have placed your order, you will need to make payment for the bond. You can pay for the bond using net banking, debit card or cheque.
Once the payment is made, the settlement process begins. The settlement process involves the transfer of the bond to your Demat account.
Holding the Bond:
After the settlement process is completed. you will be able to see the bond in your Demat account. You can hold the bond till maturity or sell it in the secondary market.
Here are the top 5 bond purchasing platforms in India:
- National Stock Exchange (NSE): The National Stock Exchange of India is one of the largest stock exchanges in India and offers a platform for buying and selling bonds.
- Bombay Stock Exchange (BSE): The Bombay Stock Exchange is another major stock exchange in India that offers a platform for buying and selling bonds.
- Clear Corp Dealing Systems India Limited (CDSL): CDSL is a subsidiary of the Central Depository Services (India) Limited and provides a platform for buying and selling government bonds.
- National Securities Depository Limited (NSDL): NSDL is a depository participant that offers a platform for buying and selling government bonds.
- State Bank of India (SBI): SBI is one of the largest public sector banks in India and offers a platform for buying and selling government bonds through its SBI e-Know Your Customer (eKYC) portal.
Note: It’s always recommended to do your own research before choosing a platform to invest in bonds and consult with a financial advisor if needed.
Here are the steps to buy bonds using the Zerodha app
- Log in to the Zerodha app: Open the Zerodha app and log in to your account using your username and password.
- Search for bonds: To search for bonds, go to the search bar and type in the name of the bond you want to buy.
- Select the bond: Select the bond you want to buy from the search results. The bond details will be displayed on the screen.
- Place the order: To place the order, click on the ‘Buy’ button. Enter the quantity of bonds you want to buy and the price at which you want to buy the bond.
- Confirm the order: Review the order details and click on the ‘Confirm’ button to place the order.
- Make payment: Once the order is confirmed, you will be redirected to the payment gateway. Choose the payment method of your choice and complete the payment.
- Settlement: After the payment is made, the settlement process will begin. The bond will be credited to your Demat account once the settlement process is completed.
Note: Zerodha charges a nominal fee for buying and selling bonds. It’s always recommended to do your own research before investing in bonds and consult with a financial advisor if needed.
At the end if you are looking for an alternative of Fixed deposit. Government or Corporate bonds help you to increase your wealth much faster.