3 ways bonds can help you meet short-term financial goals!

financialexpress.com:

Have you ever thought about how you can leverage debt instruments to meet your short-term financial goals? The biggest advantage with investment in bonds is that they can be easily converted into cash, so liquidity can never be an issue.

When dealing with short-term goals, it’s crucial to consider that the goal’s time frame is brief. Therefore, one cannot afford to be lax with the amount invested or take excessive risks.

Vishal Goenka, Co-Founder of IndiaBonds.com, said, “Selecting the appropriate asset class becomes paramount. Opting for equity, especially in a volatile market with capital risks, may not be prudent for short-term goals. In such instances, bonds emerge as the sensible choice.”

One of the primary advantages is the typically higher interest income compared to a regular savings account, he emphasized. “Additionally, the ability to selectively choose bonds with near-future maturity aligns with short-term goals. Furthermore, in the event of emergencies, selling bonds does not incur penalties, unlike FDs.”

Goenka explains how bonds can help retail investors attain their short-term financial goals, along with examples:

Regular Interest Income:

Bonds pay regular interest in the form of coupon payments to their holders, providing a predictable income stream. Retail investors can use this interest income to meet their short-term financial needs, such as paying bills, funding a vacation, or covering unexpected expenses.

Preservation of Capital:

Bonds are generally considered safer than stocks, especially government securities or AAA-rated bonds from stable corporations. They offer the assurance that the invested capital will be returned at maturity, making them ideal for investors who want to preserve their