<\/span><\/h2>\n\n\n\nDitch the financial jargon and what’s a bond, really? Just a loan, but with you as the lender. So, when you purchase a bond, you’re essentially lending cash to a government or corporation for a set period, and in return, you get regular interest payments (the coupon) and your initial amount back when it matures. Let’s say, for instance, you pick up a \u20b910,000 bond with a 7% annual coupon and a 5-year term. You get \u20b9700 every year for five years, and then your \u20b910,000 is back in your pocket. The best part? No major calculations needed to figure out your returns, unlike equities, and that’s precisely the charm. <\/p>\n\n\n\n
<\/span>Why Salaried Investors Tend to Ignore Bonds, and Why That\u2019s a Mistake<\/strong><\/span><\/h2>\n\n\n\nMost salaried investors feel pretty “covered” on debt instruments thanks to EPF, PPF, or fixed deposits. So, bonds just get skipped over in favor of equity. But bonds aren’t exactly interchangeable with FDs. For one, they trade on exchanges, which means their price can fluctuate wildly before maturity. Then there’s the variety: government, corporate, and tax-saving, to name a few. And they often pay better than a comparable FD once you factor in the tenure and issuer type. The problem is, when we treat “debt allocation” as limited to EPF and FDs, we’re missing out on instruments that are specifically designed for predictable income and goal-based investing, which are a great fit for a salaried life.<\/p>\n\n\n\n