Government bonds are debt instruments where the investor lends money to the government for a fixed period. In return, the government promises to pay regular interest (coupon) and repay the principal amount at maturity. They are considered low-risk investments due to the backing of the sovereign.
Types of Government Bonds
- Fixed-Rate Bonds : Offer a constant interest rate throughout the tenure.
- Floating Rate Bonds : Interest rate varies based on market conditions.
- Zero-Coupon Bonds : Issued at a discount and redeemed at face value.
- Inflation-Indexed Bonds : Returns are linked to inflation rates.
- Sovereign Gold Bonds (SGBs) : Denominated in grams of gold with interest and capital appreciation.
Features of Government Bonds
- Low Risk Investment : Backed by the government, ensuring capital protection.
- Regular Income : Provides fixed or variable interest at regular intervals.
- Liquidity : Tradable on stock exchanges; some bonds have buyback options.
- Tax Efficiency : Select bonds offer tax benefits under prevailing laws.
- Long-Term Wealth Creation : Ideal for conservative investors aiming for stable growth over time.
Government bonds offer a safe and structured way to build wealth, making them suitable for investors seeking stability with moderate returns. Explore the range of bonds that align with your goals.