As the Reserve Bank of India slashed repo rates last week, fixed deposit yields are set to slide in the near future. In such a situation, many conservative savers are drawn towards exploring bonds for better returns amid falling deposit rates. Yet this shift demands caution—bonds introduce risks absent in FDs, like credit defaults and price volatility from rate changes. Advertisement

Bond investing is essentially lending money to issuers, governments, PSUs, or corporations, for a set period. You receive periodic interest (coupon payments) and your principal back at maturity. Amar Ranu, Head of Investment Products & Insights at Anand Rathi Shares and Stock Brokers, explains that face value represents your guaranteed repayment, while coupon rates, fixed or floating, determine annual incom

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