FD Vs Bonds: It is necessary to diversify the investment portfolio to get good returns in a reasonable risk bracket. Many people today invest in stocks and mutual funds which are medium to high-risk investment options. To get reasonable returns and safety investors often turn to Fixed Deposits (FD) and Bonds. 

What is a Fixed Deposit? 

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Fixed Deposit is a financial instrument offered by banks that gives investors a higher rate of interest than a regular savings account, until the given maturity date.

Investors put a lump sum in their bank for a fixed tenure at an agreed rate of interest. At the end of the tenure, they receive the amount they had invested plus compound interest. 

What are bonds? 

A bond is a fixed-income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an ‘I owe you' or I.O.U, (a document that acknowledges the existence of a debt) between the lender and borrower that includes the details of the loan and its payments.

Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.

Bonds are rated as representations of the creditworthiness of corporate or government bonds. The ratings are published by credit rating agencies and provide evaluations of a bond issuer’s financial strength and capacity to repay the bond’s principal and interest according to the contract.

They are rated from AAA to D, AAA being the best rating. 

 

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FD Vs Bonds 

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