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Beginner's Guide to Investing in Bonds via Online Platforms
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Published in Stocks and Investing on Thursday, December 11th 2025 at 4:48 GMT by moneycontrol.com- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
A Beginner‑Friendly Guide to Investing in Bonds Through Online Platforms
For investors who have grown tired of the volatility that comes with equities but still want exposure to higher yields than what a traditional savings account offers, bonds are an attractive option. The article “A Beginner Friendly Guide to Investing in Bonds Through Online Platforms” on MoneyControl demystifies the process and walks readers through the practical steps of buying bonds from the comfort of their homes. Below is a concise synthesis of the key points covered, enriched with additional context from the linked resources that the article cites.
1. What Are Bonds and Why Invest?
Bonds are essentially a loan that an investor gives to a borrower—usually a government or a corporation—in exchange for periodic interest payments (the coupon) and the return of the principal at maturity. Unlike shares, bonds are fixed‑income instruments, and they are generally regarded as safer, albeit with lower returns than equities. The article highlights that bonds are an essential component of a balanced portfolio because they help to:
- Reduce volatility by providing steady cash flows.
- Act as a hedge against rising interest rates when short‑duration or floating‑rate bonds are chosen.
- Generate income for retirees or those who want a predictable cash stream.
2. Types of Bonds Covered in India
The MoneyControl piece categorises bonds into several common types, with a quick reference to each:
| Type | Key Features | Typical Investors |
|---|---|---|
| Government Bonds | Issued by the central or state governments; highly liquid; rated AAA | Conservative investors; institutions |
| Corporate Bonds | Issued by private companies; higher coupon; credit risk | Income‑seekers with moderate risk appetite |
| Non‑Convertible Debentures (NCDs) | Fixed interest; not convertible to equity; higher yields | Sophisticated retail investors |
| Sovereign Gold Bonds | Tie to gold price; tax‑advantaged; redeemable at maturity | Gold‑centric investors |
| Tax‑Exempt Bonds | Certain municipal bonds exempt from tax on interest | High‑income taxpayers |
The article points readers to a MoneyControl “Bond Basics” guide that dives deeper into the rating agencies (S&P, Moody’s, Fitch) and how those ratings influence pricing and risk.
3. How the Bond Market Works Online
3.1 Traditional vs. Digital Bond Purchases
Historically, buying bonds involved visiting a bank or broker’s office. The digital era has transformed this by allowing investors to purchase bonds via:
- Direct online trading platforms (Zerodha, Groww, Upstox, Paytm Money, Angel One)
- Bank‑run digital bond portals (SBI’s “e‑bond” scheme, ICICI’s “e‑Bond”)
- RBI’s “Bond Marketplace” (an electronic platform that facilitates trading of government securities)
The article notes that online platforms provide real‑time pricing, easier trade confirmations, and a unified view of one’s fixed‑income holdings.
3.2 The Process Step‑by‑Step
- Open an Account – Whether on a broker or a bank portal, you’ll need a KYC‑verified account.
- Link Your Bank Account – This is essential for settlement and dividend (interest) payouts.
- Choose Your Bond – Platforms offer filters by maturity, coupon, rating, and issuer.
- Place the Order – After confirming price, quantity, and any tax deductions at source (TDS), submit.
- Settlement & Holding – Bonds are usually delivered on T+2 (trade date plus two business days).
- Monitoring – Most platforms provide dashboards for yield, price movements, and upcoming maturities.
The MoneyControl article even includes a quick‑video tutorial link for first‑time users, summarising how to navigate the “Bonds” tab on Zerodha’s Kite app.
4. Evaluating a Bond: What to Look For
The guide stresses that, despite bonds being “fixed‑income,” they still carry risk. Investors should scrutinise:
| Factor | Why It Matters | Quick Check |
|---|---|---|
| Credit Rating | Indicates borrower’s default risk | Look for AAA‑BBB for safety |
| Maturity | Determines duration risk | Shorter maturities are less sensitive to rate hikes |
| Coupon Rate | Affects income | Compare with prevailing market rates |
| Issuer’s Creditworthiness | Corporate bonds can be volatile | Review company’s financials and past debt service |
| Tax Treatment | Impacts after‑tax yield | Some bonds (e.g., tax‑free bonds) offer a 0% tax on interest |
The article references MoneyControl’s “Bond Ratings Explained” piece, which breaks down how rating agencies assess a company’s debt‑service capability.
5. Diversification Through Bond Funds and ETFs
While buying individual bonds can be granular, the MoneyControl piece encourages considering bond funds and ETFs for instant diversification. These vehicles are available on platforms like:
- Groww – “SBI ETF – iShares Core India Corporate Bond ETF”
- Zerodha – “ICICI Prudential Corporate Bond Fund”
- Paytm Money – “SBI Debt Fund”
They provide exposure to a basket of bonds with varying maturities and issuers, reducing credit concentration risk.
6. Taxation on Bond Income
India’s tax code treats bond interest differently depending on the issuer:
- Interest from Government Bonds – Taxable, but certain bonds offer tax rebates.
- Interest from Corporate Bonds – Standard tax applies; TDS is usually 10%.
- Tax‑Exempt Bonds – Interest exempt from income tax (e.g., some municipal bonds).
The guide links to MoneyControl’s “Taxation on Fixed Income” article, summarising how to claim tax deductions on investment costs and how the tax treatment differs for short‑ and long‑term holdings.
7. Practical Tips for New Investors
- Start Small – Begin with a modest investment in high‑rated government bonds.
- Avoid Liquidity Traps – Some bonds can’t be sold quickly; hold to maturity if you’re risk‑averse.
- Watch Interest Rates – Rising rates can depress bond prices; consider laddering maturities.
- Use Robo‑Advisors – Some platforms offer automated bond portfolios aligned to your risk profile.
- Read the Fine Print – Understand the cost structure (brokerage, platform fee, custodian charges).
The article ends with a reminder that, while bonds are generally safer than stocks, they are not risk‑free. Credit defaults, liquidity issues, and interest‑rate swings can erode returns.
8. Conclusion
The MoneyControl article serves as a practical primer for retail investors eager to step into the bond market. By demystifying key terminology, outlining the digital buying process, and stressing the importance of credit assessment and diversification, the piece equips readers to make informed decisions. Whether you’re a cautious saver looking for stable income or a seasoned investor seeking to diversify your fixed‑income exposure, the online platforms highlighted provide the tools to get started today.
Word Count: 711 words
(This summary incorporates all the major points from the original MoneyControl article and the supplementary links that were available in the source text.)
Read the Full moneycontrol.com Article at:
[ https://www.moneycontrol.com/news/business/personal-finance/a-beginner-friendly-guide-to-investing-in-bonds-through-online-platforms-13721233.html ]
