Which is a Better Investment Option - Bonds of Fixed Deposits?

When it comes to investment options, there are many options available. A few of these include Bonds, Equity, Fixed Deposit, Mutual Funds, or Real Estate. All of these options have their own pros and cons.

Also, Read: Investment Options for Womens

For those individuals who belong to the fixed income group, mutual funds, bonds, and fixed deposits are considered best. Of these, however, most people tend to opt for fixed deposits and bonds. While both are good as investment options, there are a number of differences between the two which are worth considering before opting for any of them. A few of these differences are -

Liquidity

Fixed deposits and bonds both offer liquidity. In the case of fixed deposits, if you want to liquidate your investment before the maturity date, then that can be done by incurring a small penalty. In case of bonds though, you need to sell it to a secondary market like BSE or NSE through your demat account.

Moreover, you will need buyers to purchase the bonds. The buyers always offer a much lower value and as a result most of the returns just evaporate for the investors. On top of this, the broker will also charge a brokerage fee for the transactions made which will further bring down the returns which had been anticipated.

Thus, if you want to liquidate your security on a short notice, fixed deposits are the best investment option.

Returns

The concept of bonds is yet to become popular in India. This can be gauged from the fact that the companies offering bonds provide a slightly higher interest rate as compared to fixed deposits. However, in the long run, the difference in the returns provided by bonds and fixed deposits is minuscule.

Moreover, fixed deposits offer a number of additional benefits these days such as doorstep services, online FD account management, loan against fixed deposits, and even an FD calculator for calculating the interest which you stand to receive at the end of your tenor.

The documentation is very simple and involves submitting the latest KYC documents, bank statements and recent photographs. You can also look forward to interest rates of up to 8.75% which is increased by a further 0.35% for senior citizens.

There are a number of lenders who offer fixed deposits these days. Check their interest rates, tenor, and terms and conditions properly before investing with anyone.

Also, Read Related Article: Should you invest in Fixed Deposits or Bonds?