How Investing in Bonds Has Helped Me Build My Financial Future

Investing in bonds has been one of the best decisions I’ve made in my financial journey. It has provided me with a stable and consistent source of income while minimizing my risk exposure. Bonds are a great way to diversify your portfolio and balance out your investment strategy.

What I love about bonds is the flexibility they offer. I can choose from a wide range of options, such as corporate bonds, municipal bonds, or government bonds. I also have the option of choosing between short-term or long-term bonds, depending on my financial goals.

Since I started investing in bonds, I have seen significant growth in my portfolio. It has given me peace of mind, knowing that my investment is secure and provides a steady stream of income. I have also learned the importance of patience when it comes to investing, as bonds require a long-term commitment to see their full benefits.

Investing in bonds has been an essential part of my financial journey. It has provided me with stability, diversification, and growth, making it an excellent investment option for anyone looking to build their financial future.

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Fully agree. My story is the same. All i need to do is replace the word ‘bonds’ and put in as FD in your write up.

FD - consistent return, peace of mind.

I too hold only bonds because i can pledge them and trade. It’s a good place to park your money but wouldn’t exactly call them a source of income (their barely keep up with inflation, Indian government claims that inflation is 6% but as consumers we all know it’s much higher).

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There are always two sides to a story. As someone who invested a bunch of money in bonds & FDs (Bank + company), I want to share my cautionary tale for others to take a lesson. Its a long story & may be I will write a detailed post on it later but writing a quick summary here for now. There is an upside to bonds but there is also an element of risk which cannot be ignored. Most times, this doesn’t get discussed enough.

Bonds / FDs helped me during a phase when I was jobless & needed regular income (I don’t have any loans so only had to manage my personal expenses & I live a fairly frugal lifestyle)… & everything went well considering I never had to touch my corpus . But I have also seen the other (dark) side… something else much more ‘sinister’ happened. And I did do my own research, analysed, checked credit ratings, attended roadshows, asked tough questions at investor meets etc before I invested so that wasn’t the problem. But no matter how much research you do, if balance sheets are fudged, if there is no good corporate governance, things will go wrong. And we just can’t trust credit rating agencies. DHFL, Srei, reliance capital , future enterprises, DSK are cautionary tales.

I am a secured bond holder & I am still waiting for my money stuck in Srei. From what I can see as an investor, as per the final approved resolution plan, I will lose 90% of my investment (principal amt). of c forget about interest due in the last 3 years. When it goes to NCLT, secured has no meaning. Trust me. There are a dozen court cases still playing out & Dilli abhi dur hai.

For those who are interested in the latest update on Srei + how IBC resolutions are happening , do check:

& then of c there was DHFL & Aadhar housing finance… (btw I attended the Aadhar cocktail party at Taj Mahal Palace in 2018 as an investor & somehow even now get visions of Titanic movie everytime i remember that.) :upside_down_face:

So anyway I had FDs + Bonds in DHFL (fairly large amt for a middle class person like me)… I got saved by whiskers. Did pre-mature withdrawals of FDs 5 months before it got into that mess. Those chaps at Bandra office tried their best to convince me & retain the money in FDs. They showed me plenty of fresh forms along with signed chqs of Rs1 crore amt & renewal forms. Thankfully I didn’t fall for their parlour tricks. I still get nightmares about losing that money.

I couldn’t do anything wrt the bonds (all secured of course) though. But thankfully Aadhar housing finance was acquired immediately by Blackstone & interest continued to roll in - Aadhar NCD is up for maturity later this yr. But the money in DHFL bonds was a different story - It went to NCLT for resolution in 2019, pandemic happened, then more delays. After 27 months, I got my money back- by sheer luck my investment was 199k (i got alloted less bonds in the second tranche (50% allotment) due to too many applications). Had it been even 201000/- (One bond =1000 Rs) & I had crossed the 200k threshold), I would have lost out a large chunk of my principal. The DHFL resolution laid out that only 200k was recoverable. There is a God somewhere & He has been very kind to me! Unsecured bond holders lost 64% while FD holders were strangely treated at par with secured bond holders & got back upto 200k each. There are tragic stories of many senior citizens losing their retirement savings.

Once bitten, twice shy. I still hold corporate bonds (I have exited almost all company FDs at maturity since then). When it comes to fresh investments I approach things a lot more differently today. Today one can have peace of mind by investing a certain portion of your money in bank FDs- Rs5L standalone FD per bank (in line with the DICGC insurance amt of 5 lakh, thank goodness they increased it to 5 L) & rinse repeat across multiple banks… Rate cycle is peaking, make hay & lock in at longer tenures. Bond interest rates are almost similar to bank rates right now. May be invest in RBI retail direct + RBI floating rate bonds etc. Ask yourself, if you need to take that extra risk before buying corporate bonds. Additionally, invest the rest in MFs/ equities + PPF/ NPS for long term.

There are a lot more factors at play here when investment decisions are taken. I am lucky everything turned out well for me, not everyone is as lucky.

Be extremely careful. Like Bhuvan pointed out on another thread, personal finance is extremely personal - you know your situation more than anyone else. Don’t copy just because it worked for someone else.


So true and this is the actual reality of investing directly into Corporate Bonds. Feroze Aziz of Anand Rathi used to advise during the corona times, to invest in mutual funds of bonds rather than directly as the investor would have applied his money across corporates. His second advise was if a person is investing in mutiliple bond mutual fund, to check the corporates under the fund so that there is no dupliation and this would reduce the risk further. Yes it is ok to pay the fund charge rather than get capital wiped off.

When people talk disparagingly on Bank FDs, saying it is tax inefficient, they conveniently forget that they are comparing it to a product which can wipe you out your Capital. I had first hand experience of capital getting eroded of my Equity portfolio during 2020.

A well written and true to life note - @sufimonks


To be fair, liquid/overnight/gilt funds offer comparable security to fd with added benefit of tax advantages.

Hey @neha1101 Since you mentioned corporate bond MFs, check this out:

Hey. I am happy that investing in bonds has worked well for you.

But time has changed, 1st indexation benefit has gone. 2nd Bonds are not 100% safe investment. (For example Franklin Templeton Debt funds problems in past). 3rd Returns are not astronomically high in bonds just same as bank fds or 1% higher than bank FDS in most cases.

So debt fund investing is gone story. And still if anyone wants to invest in bonds then only gilt funds are 100% safe as they have sovereign guarantee. And Liquid funds as they work as collateral in derivative trading. that’s it.

Additionally I think bonds are one the biggest product that has been victim of misselling.

Instead if someone has income like retirement corpus then keep it with front line banks in bank fd is much better option. Just fill up 15H or 15G form and take 100% tax exemption😃.


Everyone can’t fill up 15G/15H forms… One can fill those forms only if eligible. If your total income in the FY is going to cross the basic exemption limit (Rs 250000 in case of non-senior citizens) , you can’t fill up the form. Many ppl are randomly fillinf up these forms without paying heed to the two pre-conditions…First check eligibility & only then fill forms…

The reply was only added for the betterment of THAT “everyone” because the way “debt fund investing” had been glorified in the post, it was essential to give “reality check” so that everyone can understand pros and cons of debt funds don’t fall prey to misselling.

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& surprises never cease! Broker mis-sold bonds.

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