More About Fixed-Rate Bonds

Things to take care of while investing in a fixed-rate bonds

Read this before you start investing in FRBs.

Compare interest rates

Compare interest rates

Different fixed-rate bonds offer different interest rates.

It is better to check, compare and choose the higher ones for the same period.

Beware of Ponzi

Beware of Ponzi

Each bond has a pre-specified purpose for the investment. If there is no purpose for issuing bonds, or if the scheme offers you benefits or additional interest on bringing more investors, it is a scam or fraud investment. 

Beware of financial frauds and Ponzi schemes.

Check Credit Ratings

Check Credit Ratings

While investing in corporate bonds, check for the credit ratings by the credit rating agencies like CRISIL. The higher the credit rating of the bond issuer, the lower can be the risk on your investments. 

Choose the tenure of your deposit

Choose the tenure of your deposit

Make sure you are not putting all your money in a very longer-term fixed-rate bond. Keep some amount of money in shorter-term deposits as well. 

  • Short-term – six to twelve months
  • Medium-term – More than a year to five years
  • Long-term – More than five years to ten years

Not for emergencies

Not for emergencies

Keep some amount of your savings in your savings bank account for emergencies. Don’t put all your savings into bond investments.

Premature withdrawal

Premature withdrawal

Make sure you do not withdraw your fixed-rate bond before maturity. Premature withdrawal might sometimes not be allowed or have a penalty.

Nomination Details

Nomination Details

Make sure that you submit nomination details along with your application form for fixed-rate bonds. This will ensure that your money goes to the right person in case of your death.

Next section will tell us about closing and withdrawal of Fixed-Rate bonds

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