Every person wishes to build a sufficient corpus for himself/herself so that they can have a peaceful life in their retirement.
One of the ways by which investors can do this is by investing in fixed income securities.
In Asia, the Indian debt market is considered one of the largest.
The instruments in the debt market are mainly issued by central/state governments, corporates, banks, and financial institutions.
The Indian debt market mainly comprises the Government of India securities.
The corporate bond market is also fast developing with increased participation from financial institutions, banks, provident funds, mutual funds, High Net worth Individuals and Retail participants.
As per a report, in 2025, the corporate bond market might reach Rs. 65-70 lakh crore from Rs. 33 lakh crores in 2020.
As per a Morgan Stanley report, in early 2022, India might be included in the global bond indices. This could bring more bond inflows to the Indian debt market and could be a turning point for it.
What are fixed income securities?
Fixed income securities or debt securities are investments that pay out a set amount of money at regular intervals, usually known as a coupon (interest rate).
The holder of fixed income security receives this coupon payment (interest) until the security reaches maturity, at which point the investor will receive the final principal amount.
Basically, an investor is lending money to the issuer in this instrument.
The issuer can be government, banks, companies and financial institutions, and the securities can be issued for a short, medium or long term.
Who should invest in fixed income securities?
There is no one-size-fits-all answer to this question, as the decision of whether or not to invest in fixed income securities will depend on the individual investor's financial goals and risk tolerance.
Those looking to generate steady income while preserving their principal investment may want to consider investing in fixed income securities as they tend to be less volatile than stocks.
Investors who are seeking to diversify their portfolios also has to invest sizeable portion in fixed income securities.