{"id":7638,"date":"2025-07-11T07:24:57","date_gmt":"2025-07-11T07:24:57","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&p=7638"},"modified":"2025-07-11T07:35:58","modified_gmt":"2025-07-11T07:35:58","slug":"bonds-2","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/bonds-2\/","title":{"rendered":"Bonds"},"content":{"rendered":"

A bond<\/strong> is like a loan<\/strong> that you give to a company or the government.
In return, they promise to pay you back with interest<\/strong> after a fixed time.<\/p>\n\n\n\n

Think of it like this:<\/p>\n\n\n\n

\n

You lend ₹1,000 to a company today. They use your money, and after a few years, they return your ₹1,000 plus interest<\/strong>.<\/p>\n<\/blockquote>\n\n\n\n

Key Characteristics of Bonds<\/a><\/strong><\/h2>\n\n\n\n
    \n
  1. Fixed Interest (Coupon Rate)<\/strong> – You get a fixed income regularly (like 6% per year)<\/li>\n\n\n\n
  2. Maturity Period<\/strong> – Bonds are for a set time (e.g., 5 years, 10 years)<\/li>\n\n\n\n
  3. Face Value<\/a><\/strong> – The original amount you lend (usually ₹1,000 or ₹100 per bond)<\/li>\n\n\n\n
  4. Low Risk (Generally)<\/strong> – Safer than shares<\/a>, especially government bonds<\/a><\/li>\n\n\n\n
  5. Tradable<\/strong> – You can buy or sell bonds in the market before maturity<\/li>\n<\/ol>\n\n\n\n

    How Do Bonds Work?<\/strong><\/h2>\n\n\n\n
      \n
    1. You buy a bond<\/strong> (say ₹1,000)<\/li>\n\n\n\n
    2. You get regular interest<\/strong> (e.g. ₹60 per year for 6% bond)<\/li>\n\n\n\n
    3. After the bond matures (say in 5 years), you get your full ₹1,000 back<\/li>\n<\/ol>\n\n\n\n

      Types of Bonds in India<\/strong><\/h2>\n\n\n\n
      Type of Bond<\/th>Description<\/th><\/tr><\/thead>
      Government Bonds<\/strong><\/td>Issued by the RBI or central\/state governments; very safe<\/td><\/tr>
      Corporate Bonds<\/strong><\/td>Issued by private companies; higher return but more risk<\/td><\/tr>
      Tax<\/a>-Free Bonds<\/strong><\/td>Interest earned is not taxed (e.g., from NHAI, REC)<\/td><\/tr>
      Sovereign Gold Bonds<\/a><\/strong><\/td>Linked to gold prices; pays interest + gold value<\/td><\/tr>
      Zero Coupon Bonds<\/a><\/strong><\/td>No regular interest; sold at a discount and redeemed at full value<\/td><\/tr>
      Convertible Bonds<\/a><\/strong><\/td>Can be converted into company shares later<\/td><\/tr>
      Green Bonds<\/strong><\/td>Used to raise money for environmental or clean energy projects<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      Why Do People Buy Bonds?<\/strong><\/h2>\n\n\n\n

      Steady Income<\/strong> – Great for retirees or conse<\/a>rvative investors
      Safer Than       Stocks<\/a><\/strong> – Less market risk
      Diversification<\/a><\/strong> – Balances your investment portfolio<\/a>
      Tax Benefits<\/strong> – Some bonds offer tax exemptions under Section 54EC or are completely tax-free<\/p>\n\n\n\n

      Simple Example<\/strong><\/h3>\n\n\n\n

      You invest ₹10,000 in a bond that pays 7% yearly interest for 5 years.
      Every year, you get ₹700 as interest.
      After 5 years, you get back your full ₹10,000.
      Total gain = ₹3,500 over 5 years<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

      A bond is like a loan that you give to a company or the government.In return, they promise to pay you back with interest after a fixed time. Think of it like this: You lend ₹1,000 to a company today. They use your money, and after a few years, they return your ₹1,000 plus interest. […]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7638","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7638\/revisions"}],"predecessor-version":[{"id":7639,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7638\/revisions\/7639"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}