Fixed income securities give guaranteed returns, which is why they are highly popular among conservative investors, looking for stable returns. Since these financial instruments offer guaranteed returns, they are latent to market volatility. Below is a list of the some of the popular fixed income securities in India:

1. Fixed deposits

Returns from fixed deposits are guaranteed, safe and higher than a savings account. Fixed deposits come with a lock-in period, where you can deposit your money for a tenure suiting your needs and preferences at an agreed interest rate that remains unaltered throughout the tenure.

On the day you make the deposit, you get a certificate outlining the final maturity amount along with the applicable rate of interest and the tenure. Market fluctuations and extremities don’t impact the returns.

2. Bonds

Bonds are debt instruments which are issued by the government and large companies to raise capital. As a debt instrument, bonds are basically loans taken by the issuing entity.

In lieu of the borrowing, the bond issuer has an obligation to return the loan amount with interest. Usually, the principal amount is paid back at maturity. In the meantime, interests are paid at regular intervals.
  1. Fixed maturity plans (FMP)

    Fixed maturity plans are close ended mutual funds with predetermined tenure. It means you can’t exit out of these funds before the end of the tenure or the lock-in period. Though the calculation of returns for FMPs is not as definite as that of fixed deposits, they are indicative.

    Since they invest in corporate bonds and government securities, the return at the end of the tenure is generally assured and predictable.

  2. National Service Certificate (NSC)

    NSC, can be availed from any post office. You can buy an NSC in your name, jointly or even in the name of a minor. These certificates earn a fixed interest rate, which again is significantly higher than the returns on the savings account. NSCs come with two maturity periods – 5 and 10 years.
One can buy certificates worth as little as Rs.100. There is no maximum limit, and up to Rs. 1.5 lakhs amount of investment is eligible for tax benefits under section 80C of the Income Tax Act, 1961.

Investing in fixed income securities keeps your investment guarded against market uncertainties. If capital protection is your goal, you can opt for investing in these financial instruments. Before investing in them, it’s important to know the lock-in period as liquidating them before the end of the tenure can attract a penalty.

Learn more about Mutual Funds for a good personal financial management.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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