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Which Bonds to Buy for Retirement Savings in 2022?

Neeraj

Neeraj

Aug 19, 2022

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Which Bonds to Buy for Retirement Savings in 2022?

Retirement is the reality of life. No one can run away from the cycle of life. The early you plan the better returns you can expect from your savings or investments. During the golden days (old age), it becomes difficult to do hardships to earn living. Life becomes struggling if you do not plan your retirement and invest wisely. The amount required to enjoy your retirement depends on varied factors. We are also going to cover answer to the question - which are types of Bonds to buy in 2022 in this content. 
You need to save funds considering your lifestyle, liabilities, social and personal responsibilities, and others. The choice of investment avenues is necessary for the best returns. The returns offered by the different avenues varies because of many considerable factors. Hence, one should choose the best suited investment avenue that meets your expectations. Among the few fixed income securities, bonds are a popular option. People are found googling answer to the question why to buy Bonds for long term in India. It has become preferred option not only for the retail investors but also for the institutional investors in India.  

Why Bonds always selected for early Retirement planning in 2022?

Since early retirement planning is a responsible decision, you need to plan well. A hasty decision can not only result in disappointment but also can make you experience monetary loss. Although interest and inflation continued to rise in the current year, there is no substitute to better than bonds for retirees. Let us here learn why bonds are always selected for early Retirement planning in 2022 by the individuals in the country. 
There are a number of good reasons that make bonds an attractive instrument. It has many irresistible features. Let us first learn about features of bonds. 

7 Key Features of Bonds Investment

1. Face value - is the minimum value at which a single unit of bond is issued. A bond is issued with a minimum face value of Rs. 1000/- to Rs.10,00,000/- in India.  

2. Coupon rate - a firm that issues bonds is liable to pay a fixed rate of interest to a bondholder which is termed as Coupon rate.  

3. Coupon frequency - is the interval at which the agreed coupon is paid to an investor in bonds which can be monthly, quarterly, half-yearly, annually and cumulative in nature. The interest rate can either be fixed or floating.  

4. Maturity - Each bond issued by an organisation comes with a maturity. The maturity can be short-term (1 - 5 years), intermediate term (5 - 12 years), and long-term bonds (over 12 years). 

5. Issuer – is the entity that issues Bonds to raise money to fund ongoing or upcoming projects, business operations, business expansion, and more. For example, central government, state governments, corporates, and public sector undertakings (PSUs). 

6. Credit Rating – is the rating given to an issuer by the authorised rating agencies based on the creditworthiness of an issuer. Bonds with AAA rating are considered safe and a bond with minimum risk of default. 

7. Bondholder can be an individual or an institution in India who owns bonds. 

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Advantages of choosing bonds for early Retirement planning in 2022 

The year 2022 have seen the continued growth in inflation rate. The repo rate hike had a nationwide impact and affected EMIs of home loans. The budget of households increased almost to double. The interest that investment in fixed deposits gives is much lower in comparison to the rate at which inflation is growing. 
Bonds are known to offer many advantages over other investment avenues. It is a good option and best Alternative of Fixed Deposits amid High Inflation Rates. 

Below are the Advantages of choosing bonds for early Retirement planning in 2022

1. Higher returns - Bonds are known to render higher returns on your investment. The returns in bonds generally range between 7 to 14%. The rate of interest varies based on the maturity period and the issuer type.  

2. Fixed and predictable income – The income in bonds is fixed and predictable. It can help you plan your goals well including retirement. A fixed income whether has its own advantage. Based on your predictable income, you can plan your further investments considering your fund need for retirement. 

3. Tax benefits – tax is also a big concern for many investors as it impacts your returns. The income derived after deducting tax is the actual returns that can be considered. Most of the investment avenues in India attracts tax to be paid. There are some bond types that are known to provide tax benefit. The interest income earned has tax exemption. Tax-free bonds are the bonds having the tax exemption feature preferred for its tax-free feature. Tax exemption or a minimum tax can help you generate more income helpful in creating surplus for your early retirement not only in 2022 but anytime you plan. 

4. Capital protection – investment in an investment avenue having risk of capital is not recommended for investors planning retirement. It is a promising idea to have a look on the list of best bonds for retirement planning for a better early retirement planning. It is necessary for you to ensure you invest in an instrument that guarantees you capital protection. 

Bonds specially government bonds come with sovereign guarantee that features total capital protection. The advantage of capital protection is also a key reason why Bonds always selected for early Retirement planning in 2022 as a good option.   

5. Liquidity – it is the feature that makes an investment instrument attractive and a desirable choice for the retail segment investors. Bonds are preferred for its liquidity that allows you to sell bonds as and when required. You can buy bonds or sell bonds in the secondary market to reinvest the gained amount in other bonds yielding better returns. Higher the returns better you can plan your retirement expenses.  

6. Risks – the risk for investors is a matter of concern. Expert advice you to consider risks seriously as it can have a significant impact on your financial goals. You can seek guidance on which are types of Bonds to buy in 2022 that can help you avoid risks or minimize risks. Consider buying bonds with higher ratings. Bonds with AAA rating are considered risk-free bonds.  

Why to buy Bonds for long term?

Buying bonds for long term brings to you a host of advantages. Bonds are chosen for investment because of the numerous advantages it offers to an investor. The features it has make it an irresistible investment avenue.

1. Bonds have different maturities.

2. Bonds are known to offer better returns and stable income.

3. Bonds with long-term maturity are known to offer better returns and safety of the capital invested.      

Advantages of buying Bonds for long term

Buying bonds for long term brings to you a host of advantages. Bonds are chosen for investment because of the numerous advantages it offers to an investor. The features it has make it an irresistible investment avenue.

1. Buying bonds for long-term can help you accomplish your different long term goals including retirement.  

2. Bonds in a healthy economy like India are known to offer higher yields to investors holding bonds with long-term maturities in comparison to bonds with short-term maturities. 

3. Long term bonds can help you reduce the interest rate risk 

4. It can help improve your portfolio  

How are Bonds traded in the market? 

Let us also learn about the markets playing a vital role in fixed income securities. Markets in bonds keep an immense value. The two major markets are Primary market and Secondary market. Both have their importance. Secondary market here refers to the market where the sale and purchase of securities are facilitated. An investor unable to buy securities like bonds directly from an issuer can buy it from the secondary market. You can buy bonds online or through authorised brokers or security firms. 

Which are types of Bonds to buy in 2022? 

Bonds are considered safe, secure, and a relatively better investment avenue offering higher returns in India. The excellent features, pros and cons make it a superior product.  
Expert recommends the following types of bonds to buy in 2022

1. Government security (GOI)  

2. Corporate Bonds 

3. RBI Bonds (FRB) 

4. Zero Coupon Bonds (ZCB) 

5. Inflation Linked Bonds 

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How to Invest in Bonds in India?

Investing in bonds at BondsIndia is easy and hassle-free.  
  • Visit www.bondsindia.com 
  • Create your account  
  • Complete your KYC online 
  • Browse through the distinct categories and choose the bonds you wish to buy. 
  • Select the mode of payment 
  • Initiate the transaction  
  • Bonds come with many benefits that make it an attractive option for safe investment. The return you expect from it depends on the maturity you choose, the type of bond you choose, the company you prefer, and a few more factors. One of the important essential you should never ignore is the credit rating or the creditworthiness of the issuer.  
    Your wrong decision can make you repent and suffer monetary loss. You may lose your capital along with the expected interest income. There are many reasons why people buy Bonds for long term in India. You can choose to make your investment in bonds that interest you more. 
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