Bonds are financial instruments that represent a loan made by an investor to a borrower, typically a corporation or government entity. They are a form of fixed-income securities and come in various types, each with its own unique features and benefits.
National Savings Certificate bonds are government-backed savings bonds that offer a fixed interest rate over a predetermined period. These bonds are considered safe investment options and are particularly popular among risk-averse investors.
1. Government guarantee ensures safety.
2. Fixed interest rates offer stability.
3. Tax benefits under Section 80C of the Income Tax Act in India.
1. Fixed tenure with limited liquidity.
2. Interest rates may not beat inflation in certain economic conditions.
Bonds play a crucial role in diversifying investment portfolios and meeting various financial objectives. Understanding the nuances of different bond types can help investors make informed decisions aligned with their risk tolerance, financial goals, and tax considerations.
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