What are the Benefits of Corporate Bonds?

Earlier companies and governments used to seek bank loans to fulfill their need for funds.

For a loan sought from a bank, the company needs to pay a higher interest rate in comparison to the interest payable to a bondholder. So, bonds have become a preferred source for the issuers in need of money to fund their expenses for projects, capital, and other needs.

Based on the features, bonds are categorized into distinct types. You can choose to make your investment in bonds that interest you more. Now you can buy corporate bonds in India in a couple of minutes. Let us learn about the benefits corporate bonds provide.

What are corporate bonds?

Corporate bonds are a debt instrument. It is issued by a private firm or corporates with the aim of raising money from the investors in the market. In simple words, it is an agreement between a corporate bond issuer and the bondholder.

Where to buy corporate bonds in India?

There are various sources engaged in the trade of corporate bonds. You can buy corporate bonds in India online through a brokerage firm, bond broker, authorized bond seller, and from the secondary market. You can alternatively visit online platforms like bondsindia.com and others.

The Benefits of Corporate Bonds

Corporate Bonds are chosen for their attractive features. Unlike other types of bonds, Corporate Bonds do have their pros and cons.

Following are the key benefits of Corporate Bonds:

· Higher returns

Corporate Bonds are popular among retail investors for their returns. It provides higher returns. The coupon rate is generally higher than fixed deposits and other instruments in the Indian market.

· Liquidity

Corporate Bonds have liquidity feature that makes it more attractive. A bondholder can buy or sell corporate bonds in the secondary market anytime without hassle. You do not have to pay heavy charges for the trade.

· Periodic income

Corporate Bonds provide a fixed interest on your investment which becomes a periodic income for you. In addition, you also get your capital/face value back at the end of your maturity date.

· Safe investment

Corporate Bonds with higher credit ratings are considered highly safe. You can also be rest assured about your capital as the chances of default minimize with AAA-rated companies. If capital protection is a major concern for you, prefer buying bonds of an issuer having a good reputation in the market and higher ratings from the rating agencies.

· Several maturities options

Corporate Bonds are available with several options. You can choose short-term Corporate Bonds having maturity 5 years or less. Medium-term Corporate Bonds have maturity ranging between 5 to 12 years. Long-term Corporate Bonds are the options for investors comfortable with the maturity that can go up to 30 years or even more. Investors choose maturity considering his/her different financial goals.

Investors look for Corporate Bonds because of the many advantages it provides. Consider the pros and cons and diversify your portfolio to enjoy the fruit of your investment in highly demanding corporate bonds.