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Bonds - Is investment in bonds risk-free?

10 Apr 2003

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After making the decision to diversify his or her portfolio with fixed income investments, the investor is faced with choosing between investment in individual Bonds and investment in fixed income mutual funds. The decision can be quite a difficult one.

If you choose to buy an individual bond, you need to look at its credit quality. Bonds with high ratings such as AAA are the best ones unless you are buying a Government of India security. The drawback is that you are betting on one company or one security, however good its current condition is.

If you choose bond funds, you need to understand a few things. The first thing to consider is that Bond Funds, which may hold bonds exclusively, are not in reality fixed income securities. They do not provide guaranteed income, and they do not promise repayment of principal.

Fund managers can trade in and out of securities solely at the discretion of that manager. The risk-return profile may, in fact, change every day. Bond Funds generally have quarterly payments to holders, but the frequency will vary.

Source: BACK

To be added soon

Priyanshu B. Tanna

SEBI registered IFA

ARN119467 & EUIN E-183966

To be added soon

Bharat Tanna

SEBI registered IFA

ARN26176 & EUIN E-044509

To be added soon

Kundan B. Tanna

SEBI registered IFA

ARN294073 & EUIN E-553599

Risk factor

Risk Factors – Investments in Mutual Funds are subject to Market Risks. Read all scheme related documents carefully before investing. Mutual Fund Schemes do not assure or guarantee any returns. Past performances of any Mutual Fund Scheme may or may not be sustained in future. There is no guarantee that the investment objective of any suggested scheme shall be achieved. All existing and prospective investors are advised to check and evaluate the Exit loads and other cost structure (TER) applicable at the time of making the investment before finalizing on any investment decision for Mutual Funds schemes. We deal in Regular Plans only for Mutual Fund Schemes and earn a Trailing Commission on client investments. Disclosure For Commission earnings is made to clients at the time of investments. Option of Direct Plan for every Mutual Fund Scheme is available to investors offering advantage of lower expense ratio. We are not entitled to earn any commission on Direct plans. Hence we do not deal in Direct Plans.

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