Step 1: Decide what the money is for
Bonds suit money you won't need for a known period — 1 to 10 years — and want steadier than shares. For money you may need any day, keep an emergency fund in a savings account or FD first.
Step 2: Choose your route
| Route | What you need | Good for |
|---|---|---|
| RBI Retail Direct | Free account with the RBI, savings bank account | Government bonds, T-bills, SDLs |
| Stock exchange | Demat and trading account | Listed bonds, tax-free bonds, NCDs |
| Public issue (NCD IPO) | Demat account, ASBA/UPI | New corporate bonds at issue price |
| Online bond platform | Demat account, SEBI-registered platform | Browsing many corporate bonds |
| Bank branch | Savings account | RBI Floating Rate Savings Bonds |
| Debt mutual fund | Mutual fund KYC | A ready-made spread of bonds |
Step 3: Check every bond on five points
- Issuer and rating — AAA and AA are high safety; look up the latest rating.
- Yield to maturity — your real return at today's price; compare bonds by YTM, not coupon.
- Maturity — match it to when you need the money.
- Liquidity — how often it trades; can you hold it to maturity if you can't sell?
- Features — secured or unsecured, call options, interest frequency, and tax.
Step 4: Spread it out
Don't put a large share of your savings in one company. A bond ladder — bonds maturing in, say, 1, 2, 3, 4 and 5 years — gives you money back every year and lets you reinvest at the rates of the day.
Step 5: Keep records for tax
Interest is taxed every year at your slab rate (except tax-free bonds); keep the interest statements and contract notes. Gains on listed bonds held over 12 months are taxed at 12.5%.
Watch out for
- Very high coupons from unknown or low-rated issuers — the yield is high because the risk is.
- Unregistered sellers. Buy through RBI Retail Direct, the exchanges, banks or SEBI-registered platforms only.
For general information only, not investment advice or a recommendation. Oxon Fintech is a loan facilitation platform, not a SEBI-registered investment adviser, bank or mutual fund distributor, and does not sell bonds, deposits or funds. Rates and rules are as checked on the date above; confirm with the issuer, bank or fund house before investing. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.