Bonds क्या हैं, कैसे काम करते हैं? | Bonds Investment & Bond Market Explained in Hindi | #1 - YouTube

Friends, we all know that we get good returns in a long time in the stock market

But with that comes the market risk

People don't like the ups & downs of the market

Many people want monthly income from their investments

So, these are one type of investors

There is another type of investor, who doesn't want to invest in the same asset class

Many people are this type of investor & it is correct because diversification reduces the risk

If we are not investing in the stock market then many people invest in FDs

A Future fund is an option of Equity, there, money is been invested in the stocks

In FDs, the returns are very less

So in this situation, comes the Bonds

Here, returns are good than FDs & risk is less than the stocks market

Do we know about the Bonds or how they are operated in the Indian?

90% of the people don't know about it, you too will get to know something new in this video

For example, in the US, the bonds market are bigger than the stock market

In China, the bond market is equal to the stock market

In many countries either they are equal or the bond market is bigger than the stock market

In India, it is an under-penetrated market

Many people say to buy the bonds which are listed on the stock exchange from the Demat account

But do you know, this is less than 1% market

Maximum Bonds are not traded on the exchange

Maximum bonds are traded on the OTC market, which is 99% of the market

How to invest in bonds?

You may be wondering, do you even know about the bonds?

Even if you don't know it, we are going to talk about all these in this video

With this, we will also see, how we can invest in bonds that are not listed on the stock exchange, online?

We will also see the taxation in bonds, watch the video till the last

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What are Bonds?

If there is a company, that wants to raise funds, then what are the options available?

One option is to directly raise the funds from the stock market

The second option is to take a loan from any bank

The third option is to raise money from the public or financial institutes by issuing Bonds

If the company goes to the stock market then there its equity gets diluted

This means they have to make public their shareholders, their % holding decreases

Maybe any company don't want to do this, if they go to the bank then they have to pay high-interest rate

For example, if they have to give an interest rate of 11-12%

Then the company will think to explore the options which can give an 8-9-10% interest rate

These options are Bonds

The company gets the money on low interest rate

We will understand it with a graphical representation

How the government will raise the funds? They can go to the public, raise the funds in form of Bonds

Or they can go to the financial institutions to raise the funds

If the government issues Rs.10,000 crore bonds

Then public & financial institutions will invest there like Rs.10,000

They can invest per bond, so these are face value

I will talk about all these terms

Here, if people raise the funds i.e. Rs.10,000 crores

Then the government gets the money & says, we have taken this money for a fixed time period i.e. 5 years

In return, we will give you some interest every month

This means, here, annual interest is promised to you

Let's say; if you are promised 8% annual interest

Then either you will get the interest every year

Or you will get the total amount including the compounded interest, after the maturity period

So, government & companies both raise the funds through Bonds

Which we call as Corporate Bonds,

So, if the money will go to the corporate then in return it will give you some annual interest

Why does investing in Bonds make sense?

We will understand the operation of banks

It is a very simple operation

It raises money from us in form of FD, Savings account, Current account

For example, if a bank gives us 5-6% interest on an FD

Bank added a margin on it of 5-6%

And give it to corporate on 10-11% in form of a loan

What happens in Bond is this margin is finished

Corporates say that we leave 2.5 percent from our side, you take two and a half percent extra

In our example, If we get 2.5 percent above 6 percent in FD, if we get 8.5% then what is bad?

If we compare returns and risk, On one hand, there is a stock market where Risk & Returns both are high

On another hand is FD, where risk and return both are low

So there's a path between them is Bond, where are moderate returns and risks

If we talk use case of a bond, The first is that we get fixed returns

If someone has a monthly or annual income then it is a good option for them

Second, we can diversify our investments

Third, Maybe it is not known to many people, that you can use bond as a pledge

Many people trade in future and options, there they need collateral to raise margin

There are so many bonds, you can use them as a pledge

In fact, many HNI park their lump sum amount in bonds

If we talk for average in India, around 20% of its portfolio is in bonds

But retail investors don't have any specific option yet to invest.

How to invest in it, we will talk sooner

Before that, we will discuss one or two more concepts

many times you hear name of debenture with bonds

So many people get confused in this

These terms are interchangeably used in India

But still, if we talk overall, bonds are generally secured.

That is, some asset is kept as security if we talk about govt. bond, government gave its own guarantee

If we talk of corporate bonds, asset is kept as security

On the other side debenture can we secure or unsecured

So if we are investing in any debenture, then we should see whether it is a secure or unsecured

Other than that many more terms are used But we talk about them soon when we see the online demo

I'll explain terms as they come

But before that we try to know that what is the status of bond market in India, how is it operating.

See on the one hand, as we talked earlier whether there it is a developed world or even china

Within all these countries, the bond market has either bigger than the stock market,

has bigger than the equity market, or is almost equals

In India, the bond market is very under penetrative

Especially retail investor has not a specific option to invest in it

So generally, how retail investors invest in bonds, they buy debt mutual funds

But mutual fund charge their fee So if you want to save this fee,

You can directly invest in bonds to get better interest

Then second, we should know the difference in the primary market and secondary market

see what is primary market whenever a new bond comes new i.e. bond IPO comes

Then if we invest in it, then it primary market for Example if NHAI has issued bonds

We bought it and we waited it for maturity for 5 years, then we bought bonds from the primary market

If we want to sell those bonds before its maturity period

Then we have to go to the secondary market i.e. we have to find a new buyer

So this is called secondary market, when we want to sell a bond before its maturity,

If we talk about the secondary market in India, If we compare it with stock market

then like you can trade through your Demat account, so many stocks are listed in exchange, Liquidity is very high

But same for Bond is not applicable

bonds which that are listed in a stock exchange, have very low liquidity

What was the reason for this liquidly, we also try to understand this

See, when someone invests in a bond, it mostly hold and wait for five, seven years

He doesn't want to sell the Bond in the middle

If some hold the bond, means there is no seller

That means no buyer will go there, and liquidity naturally comes down in the stock exchange.

If we talk in today's date, then the trading of bonds is not more than 20-30 crore on daily basis on the stock exchange

But this is the rest of the market which we call OTC market over-the-counter market

There is maximum liquidity i.e. more than 99% 8000 to 10,000 crores of bonds trade daily

The trading that is done in OTC market, so who does it more in OTC market

Look, how want to sell bonds?

So, the mutual fund wants to sell, the insurance company wants to sell if it ever feels

Insurance companies want to sell family offices, HNI these larger institution are do mainly trade in bonds

So if retail investors want to invest in Bond then what can be the way for it

So. we will talk about it

Golden pi is a good platform, it is now No.1 platform in India, where bonds are traded, it is a market Place for bonds

In golden pi we get all bonds of OTC market

Our choices are increased

Now we can buy bonds of whatever institutional seller is in the market

I have given you the link to open the golden account in the description below.

We quickly see the account opening process of it

You can sign up as Indian or as a NRI, and invest in it, or if you want sign up as

A corporate, mean you want invest through your company, you can do this as well

You can invest as a HUF(Hindu undivided family)

Or as a non profit

Now if we talk of open an account for Indian Citizen

Then, you have to entre Name, E-mail address, Password, mobile no.

Then entre your OTP

After that you have to complete your KYC

We quickly see in KYC, first to entre PAN detail

Upload in PDF or jpeg format

After this you have upload proof of address

i.e. Aadhaar card, passport, voter ID, or a driving license here

Note, upload front and back both the side

Upload passport size photo here

Bank account detail to upload here

Like cancelled cheque, passbook or a bank statement

Keep in mind that here your name account number and IFSC should be Clearly Mentioned inside it

Also, pay a little attention here, we also have to upload the demat details.

Because your bonds will reflect in it

For that we have upload some detail of Demat account

We call it Demat CMR copy, meaning client master report

Wherever you have demat account,there

In zerodha, Angel Broking, upstocks, or with any other broker, you get it from there

If I quickly show you an example of zerodha, you go to your console,

Go to documents, here you can select zerodha CMR copy

If you click E-mail to me, you get a copy on your email

Which you have to upload on golden pi

After opening the account, we can discover bonds here, here I have already logged in

Go to discover bond, then see here we get all the Bonds here

Here we get yield, how much % return we get

You can flitter it by different ways

We quickly understand all these terms how can we filter and what do these terms mean

If your investment purpose is higher fixed income then click here this way, whatever your investment purpose

Whether you want to save capital gains tax or you want to invest in short term want tax free return

Want to pledge for F&O, you cannot pledge on every bond, that also you can select here

You can filter as you want tax exemption or invest as NRI

After that if we come down here then you can also filter here like a credit rating

Means, AAA rated is highest rating, credit rating agency rate bonds according to it risk

You can select that

I will made a detailed video on rating

Yield, how many returns we will get in it, we can also filter according to Yield

Yield is little different from the interest rate

You hear term in bonds which we call a coupon rate

Whenever there is a new Bond is come, the interest rate that is promised at that time, we call it the coupon rate

Now see many charges are used inside finance, If we call it interest rate, there is no problem in that generally coupon rate is used.

But the yield can be different when you are buying or selling the bond before maturity.

That bonds price will be different because interest rates are very fluctuating.

In that time period when you purchased a bond according to that returns until the maturity time,

According to that the yield is calculated , if you want detailed video on yield than tell me in comment section.

Then you can filter it according to tenure also up to less than 1 year or

1 to 5 years or 5 to 10 years, more than 5 years

Bond face value means while issuing the bond the price of that bond,

It is important because the minimum amount to invest in one bond some times one bond is equal to 10 lakhs,

According to that you can filter too ,Bond face value starts from 1000 rupees.

Taxation on interest received,

You can also invest in tax free bonds otherwise other bonds are taxable.

Some bonds are available on discount also because the fluctuating price of interest rate.

If the face value of the bond was 10k and today it is trading in 9k because fluctuation of rates,

If bond value trades below face value then it is called at discount but if trades on premium then it is called on premium.

But if it is trading at same value then it is called At par.

You can filter it according to seniority also means if any bond is senior by chance in case of companies bankruptcy,

First payment to be made ,according to that the loan can be senior debt, sub ordinate debt or majorly debt,

Bond also have seniority that its a senior bond or the sub ordinate bond.

We have recently talked about security that also you can select,

Perpetual bond means that bond will goes on with interest payment with no fixed maturity time.

Call option means in many bonds there are call options ,lets say if any bond have maturity of 10 years,

If any company hit the call option for 5 years then it call after 5 years means,

Means if some people wants to give back there bonds then they can give at that time,.

So this is the call option. if you did not want to invested in any company for a long time,

or if you want to see if there is any call option is available or not then this also you can filter,

We have seen all the filters and understood the terms

Other than that we can look collection

IPOs are also started in bond we invest it by online,

You select latest IPOs from here or monthly fixed income bond,

or the high yield bond. so this are the collections.

Let's see more concepts such as tax-free bonds, generally issued by PSUs like NHAI, REC, PFC

Interest rates of this types bonds are low alike FDs.

But there is tax on FDs interest, this are tax free bonds advantage is that there is no tax on interest portion,

Here minimum investment is 10k

In bond IPOs minimum investment is also 10k.

While the other bonds have minimum investment of 2lakhs.

some of the bonds have 4lakhs 5 lakhs or up to 10 lakhs.

Now lets talk about the last concept taxation in bonds,

They are bifurcated in 2 ways first listed bonds of in NSE.

second is unlisted which are not listed in NSE. they both have different treatment.

Listed bonds are treated like stocks, like if we sell the investment before 12 months then it will be considered as short term capital gain

Whereas if we sold the unlisted bond before 36 months then it comes in short term capital gain,

After 36 months they are considered long term capital gain.

So when we sell any of these bond there will levy capital tax on the capital gains

The long term capital gains of any of the bonds is 10%.

In short term capital gain the tax depends on tax slab if we comes in 30% slab then 30% or 20 % or 10%.

So if you want me to make detailed video on taxation then tell me in the comment section.

So in this video you may have learned something new.

Tell me in the comment section if you learned something new, for our validation that our audience is learning something new,

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I am sure 90% of people does not know about the bond they will learn something new from this video.

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