With interest rates rising, corporate bonds offer much higher interest rates than fixed deposits. please think about it. Interest rates on corporate bonds are up to 13%, but the average interest rate on term deposits is only 5-6% over 1-3 years.
“Corporate bonds in the fixed income category are one of the best options to invest in. Currently, the best performing corporate bond is Muhoot Fincorp (Subdebt) with a yield of 10.50%. Indiabulls Housing Finance Limited (Unsecured) Yield 14.25%, said Ankit Gupta, founder of BondsIndia.com.
Right now, not only corporate bonds but also government bonds are doing well. “The range of returns Treasuries offer on his 10-year is around 7-8%, which is pretty decent compared to G-Secs. is,” he says Gupta.
It is important to understand that although corporate bonds offer higher returns due to rising yields, they are also more risky than term deposits. Therefore, you should carefully check the creditworthiness of the issuer or consider investing via a portfolio diversified debt fund. “Never put all your money in bonds or time deposits of single issuers or single sector companies. Even as a, you should only invest in the highest rated bonds or time deposits.The choice also depends on the income level of the investor.If you fall into a higher income tax slab, purely in terms of after-tax returns. Debt mutual funds could be a better choice,” said Alok Agarwala, chief research officer at Bajaj Capital.Ltd.
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Also read: These bonds offer returns of up to 14%, but come with high risk