Government Bonds vs Corporate Bonds: Which is better for long-term investment?

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bonds provide investors with a comparatively secure and reliable investment alternative. Because they are guaranteed by the Indian government, these bonds are among the safest investments in India. Exciting news! Mint is now on WhatsApp Channels. Subscribe today by clicking the link and stay updated with the latest financial insights! Click here According to Abhijit Roy, CEO, of GoldenPi, in the Indian bond market, government bonds are crucial pieces of equipment that the government uses to raise money.

“They are almost entirely risk-free, which attracts risk-averse investors including banks, financial institutions, and private individuals and often have interest rates that are fixed or variable and range from 5% to 6% for 10-year bonds and usually generate yields of around 7%. G-Sec yields have an impact on interest rates throughout the economy, affecting everything from corporate bonds to bank lending rates," said Abhijit Roy. Corporate bonds are debt instruments that businesses issue to raise money.

Investors can expect a set and predictable interest income from corporate bonds. The interest rate, also called the coupon rate, is set at the time of issuance and stays the same for the bond's duration. “Investors have the possibility for bigger returns because corporate bonds often have higher yields than government bonds or bank deposits.