Bank fixed deposits lose Sheen! After RBI rate cuts, investors choose high yielding corporate bonds; here’s why

Bank fixed deposits lose Sheen! Retail investors looking for increased returns from fixed -income portfolio are moving towards corporate bonds offering high yields. After the decrease in repo rates in the repo rates since February, this change has intensified after the shortage of Reserve Bank of India (RBI), which has reduced the bank fixed deposit rate.These investors are focusing on state-category securities, NBFC bonds and small finance and microfinance bonds, providing better returns than traditional bank deposits. With a tenure of 2-3 years, State Bank of India’s fixed deposit provides maximum returns of 6.7%, while state-geni bonds from Telangana, Uttar Pradesh, Kerala and Andhra Pradesh give a return between 9–10%, with a tenure of 2-4 years.Various retail websites with minimal investment requirement to these bonds. Offer 10,000. According to the ET report, these platforms known as online bond platform providers (OBPPs) are SEBI-Penked Institutions, which facilitates electronic bond transactions.

Corporate Bond: What’s on proposal

Platforms like Indibonds, Bondbazaar, Grip Invest and Vint Wealth are experiencing increased trading activity. One platform reported double trading volume in the current quarter compared to July-September 2024. Another forum saw a ten -fold increase in new registration as compared to the previous year.Also read ITR filing FY 2024-25: Have you received income tax notice? Do not ignore it! Top types of tax notice and work are requiredAccording to the ET report, Bondbazar founder Suresh Darak said, “Direct investment in bonds can usually provide an additional 3-5 percent marks on traditional fixed deposits.” Many NBFCs and MFI bonds can potentially give 10–12%returns from organizations such as Muthoot Capital, MAS Financial, and Edelweiss Financial with AA or low ratings.Financial advisors suggested creating a diverse portfolio of these bonds instead of focusing investment in a bond, in favor of a short period of 2-3 years.“Investors can consider two, three -year bonds, which balance the yield capacity with visibility on credit risk and interest rate movements,” indibonds.com cofounder Vishal Goenka said. He notes that the risk-free curve is immersed from medium to moderate end with a maturity of 2-3 years, making this section attractive to those who are looking for better risk-working returns to grow longer.Also read Big cheer! Home loan rates head below 8% – 1% RBI repo rate cut will reduce your EMI or tenure? Check the calculationBondbazar’s Darak said, “There is a variety in diversification of issuers, tenures and ratings. Do not invest more than 10% in the same issuer, investing in one to three years helps manage the risk of reinstroving and interest rates, and diversification ensures a risk-related fixed-or-a-day portfolio.”Money managers recommend that investors monitor the financial performance and leadership history of the company, considering their high risk levels when they buy high-upper bonds. They recommend limiting the exposure by obtaining a minor amount of these bonds.(Disclaimer: Recommendations and views on stock markets and other asset classes given by experts are their own. These opinions do not represent the views of Times of India)