Investment School: What are different types of debt investments?

What are different types of debt investments?

While searching for investment products which is aimed at capital protection and fixed returns, we turn our attention to various debt products available for investment. Let us go through some of them which is not very familiar with the normal investor community.You can see the following categories in the portfolio of almost all debt mutual funds.

1. Central Govt Securities - These are the most safest debt investment that one can make. They don have any default in payments.Even in case of bad situations, the government can print currency and payback the investment to the investors.

2. State Govt Securities - These are provided by respective state government and are less liquid compared to central govt securities. It has a higher yield than central govt securities and it may default on payment but in history it has never happened.

3. Public sector bonds - These are issued by public sector undertakings who borrow funds from the markets in terms of bonds.

4. Domestic Financial Institutaion bonds - These are provided by financial institutions like IDBI,ICICI and these are unsecured bonds.

5. Corporate Debentures - Private sector companies raise fund from investors through corporate debentures.

6. Commercial Paper - Private companies meet short term(1-6 months) fund requirements through commercial paper.

7. Certificates of Deposit - These are issued by banks and financial institutions.

Apart from these , there are other common products such as kisan vikas patra(money doubles in 8 years 7 months),NSC,Post office Deposits,Senior citizen scheme in post office,GOI bonds,PPF and Bank FDs.

Learn more about Debt investment

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