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Bonds
A bond is a loan you make to a government or company in exchange for fixed interest and your money back at maturity. Bonds bring predictable income and steadiness to a portfolio that equity cannot, which is their real job. What they are not is risk-free: credit quality and interest-rate movement both matter, and the yield tells you which.
- Risk
- Credit risk and interest-rate risk. A high yield is compensation, not a gift.
- Horizon
- Match the bond's maturity to when you need the money
Who this suits
- Retirees and near-retirees building predictable income streams
- Portfolios that have grown equity-heavy and need ballast
- Goals close enough that equity's swings are no longer affordable
What to be careful about
- The yield is the risk signal. If a bond pays notably more than the government rate, the market is charging that issuer for doubt. Ask why before you take it.
- Selling before maturity exposes you to interest-rate movement; holding to maturity exposes you only to the issuer.
- Liquidity in Indian corporate bonds is thin. Buy what you can hold to the end.
The job bonds do
Equity grows a portfolio; bonds steady it and pay it. As goals approach, money migrates from the first job to the second — that is what an allocation glide actually is. A retiree drawing income and a family two years from a house purchase both need money that behaves, and behaving is what good credit at a sensible yield does.
Reading a bond like an adviser does
Start with who is borrowing and what the government pays for the same period. The gap between those two numbers is the whole story: it is what you are being paid to accept the issuer’s risk. Chasing the highest yield on a list inverts the logic — it selects for exactly the borrowers the market trusts least.
Bonds are distributed under separate arrangements from mutual funds; issuer and offer specifics are available when we talk.
What should you check before buying a bond?
Request the issuer’s offer documents and the total purchase price, including any accrued interest and charges. Ask when interest and principal are due, what could cause a loss, whether the issuer can repay early, and how you could sell before maturity. Compare the terms, not just the advertised yield.
Compare bonds with fixed deposits · Account for inflation in your return
Updated 10 September 2026 · Contact Pardeep Yadav
This product is distributed under separate regulatory arrangements from mutual funds (which we distribute under ARN-86344). Registration and empanelment specifics for this product are available on request — see our disclosures .
Common questions
Bonds or fixed deposits?
They rhyme but differ. A bank FD is simple and, within the deposit-insurance limit, protected. Bonds can pay more, can be sold before maturity, and carry the issuer's credit risk with no insurance. For money with a date on it, the deciding questions are the issuer's quality and whether you can genuinely hold to maturity.
What does the yield actually tell me?
It prices the market's doubt. Government bonds set the risk-free baseline; every extra percentage point above it is compensation for credit risk, illiquidity or both. Read a high yield as a question about the issuer, not as free income.
Can I lose money in bonds?
Yes, two ways. The issuer can fail to pay, which is credit risk. Or rates can rise after you buy, so selling early realises a loss even though holding to maturity would have paid in full. Neither is exotic; both are worth planning around.
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