@invest_mutual correct me if I am wrong, but bonds are not FD replacements.
In most, you buy a bond at a higher price. The effective yield, if you held it till maturity, is going to be lesser. If you want to make money by buying and selling bonds, you might as well buy index fund
In most, you buy a bond at a higher price. The effective yield, if you held it till maturity, is going to be lesser. If you want to make money by buying and selling bonds, you might as well buy index fund
Reason:
You should know when bond prices will shoot up to give you sufficient capital gains/profit. You should get better profit than holding the bond till maturity.
You should be certain that the company won’t default in the mean time.
You should know when bond prices will shoot up to give you sufficient capital gains/profit. You should get better profit than holding the bond till maturity.
You should be certain that the company won’t default in the mean time.
If bond is selling very cheap, it’s because the risk is higher.
Though on paper you may get high yield, there is no guarantee that the company won’t default.
Even if you got it cheap and the company didn’t go bankrupt, the bond may not be liquid enough to actually make profit.
Though on paper you may get high yield, there is no guarantee that the company won’t default.
Even if you got it cheap and the company didn’t go bankrupt, the bond may not be liquid enough to actually make profit.
Basically,
Bond/NCD ≠ FD.
Don’t blindly buy bonds.
Especially when you are a senior citizen.
Remember that if a bond has same risk as your Nationalised Bank’s FD, it’s yield will also be around same levels. If it’s not, it’s probably not equally safe.
Bond/NCD ≠ FD.
Don’t blindly buy bonds.
Especially when you are a senior citizen.
Remember that if a bond has same risk as your Nationalised Bank’s FD, it’s yield will also be around same levels. If it’s not, it’s probably not equally safe.
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