With interest rates stagnant – and perhaps moving south bonds may become an interesting option for some investors. Though I am not a great lover of bonds, I do hold some in my Dad’s portfolio. If you are investing in bonds, look out for the following:
1. Are there call and put options – if so European or American. If at intervals, what is the frequency.
2. dates of interest payments
3. Credit rating – higher the better
4. Tax implications – interest or capital gains. Backed by legal opinion or by a court ruling
5. If there is any novel feature that you cannot understand, ASK the issuer
6. Norms for multiple application – will it be rejected or treated separately?
7. Interest on application money?
8. Direct credit to bank – for interest, redemption, etc.
9. Rate of interest
10. Size of issue etc.
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