Bonds Vs Fixed Deposits: THESE debt instruments delivering up to 50% higher returns than FDs!
The first thing one needs to understand when embarking on an investment journey is risk tolerance. The second crucial aspect is ensuring that the investment journey remains stress-free and profitable. Bond investments are one such instrument that ensures investment stability and steady returns.
Bonds offer a stable return on investments with low to moderate risk tolerance. ‘A’ and above-rated bonds provide predictable returns and fixed repayment schedules, with historically low default rates, typically less than 1%. By aligning your investments with your risk tolerance, you can navigate the financial landscape with confidence and peace of mind.
AA-rated bonds have emerged as a promising investment option, offering returns that easily beat those of fixed deposits (FDs). These bonds allow investors to earn 30–50% higher returns compared to traditional FDs. This also challenges the conventional financial wisdom of many, who don’t rank this debt instrument higher in the hierarchy of investment instruments. With AA-rated bonds, investors can secure their financial future with confidence.
Also read: Bonds Vs Fixed Deposits Vs Post Office Schemes: Liquidity, risks and returns compared!
Evaluating credit ratings from SEBI-registered agencies
The most convenient way to measure bond risk is to look at the credit rating provided to it by SEBI-registered rating agencies like CRISIL, ICRA and CARE.
Nikhil Aggarwal, Founder & CEO of Grip Invest, discusses the correlation between bond ratings and returns, highlighting how AA-rated bonds can potentially yield higher returns compared to FDs.
The returns from bonds are linked to their ratings, meaning that better-rated bonds typically offer lower returns. In other words, with lower risk
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