For all those of you who are not happy with the high amc charges of debt funds, buying bonds is a good idea (oops I am not buying, I am not a bond investor, I prefer equities).

With interest rates stagnant – and perhaps moving south (I have no interest call ever) 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, do not go below any particular level – make your choice.

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. Do not expect too much of secondary market liquidity, it does not exist.

11. All my friends, relatives who bought those 9% bonds.. are now THRILLED..

10. Size of issue etc.

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