How To Buy Zero-Coupon Bonds Online in India?

If you are a regular investor in bonds, you will have known by now that some bonds do not give out any payments as interest. These bonds pay interest only on the maturity of the instrument instead of regular payouts like other bonds. Hence, they are called as Zero-Coupon Bonds. In every zero-coupon bond, interest is accrued annually. This accruing of interest is necessary because conventionally, the annual increase in the value of the zero-coupon bonds in question is reported as interest earned. Zero-Coupon Bonds - Interest Accrual The procedure to record accrued interest on all zero-coupon bonds is to record in a normal way all the bond interest that is accrued. What this means is that the amount that shows up as accrued amount, which is the same amount that appears in the statement issued by the broker, should be recorded as income from bond interest.

Buying zero-coupon bonds can benefit many investors provided the investment is done keeping in mind the long-term and short-term financial goals. Experts recommend investors learn about the investment products before investing to avoid disappointment. Making informed decisions can help you avoid disappointment and financial losses.

Buy Zero-Coupon Bonds

Investing in bonds has been made free from the hassle by some of the top online platforms in India. Bondsindia.com and a few more are considered secure platforms online for potential trade-in bonds.

About Zero-Coupon Bonds in India

Zero-coupon bonds are a debt instrument also known as an accrual bonds is a popular bond type. In zero-coupon bonds, the issuer trades at a deep discount and does not pay coupon payments. Zero-Coupon Bonds in India do not pay interest, but they can be bought at a discount on the face value. It is a reliable source of investment for the investors interested in getting the principal along with interest at maturity.

How does it work?

For instance, a zero-coupon bond that has a face value of INR 20,000 issued with a maturity period of 20 years yielding interest of 5.5% might be sold for a value of around INR 7000. The investor holding a zero-coupon bond will receive INR 20,000 at the maturity of twenty years later. So, here INR 13000 is the benefit. i.e., the return on investment made to buy zero-coupon bonds in India. Zero-coupon bonds, unlike other debt securities, can be traded in the secondary market.

Key advantages of buying zero-coupon bonds

• 1. These bonds are often known for offering comparatively higher rates of interest.
• 2. The income in zero-coupon bonds is predictable. These bonds if held until maturity, you are sure to receive a guaranteed return i.e., the full face value.
• 3. Zero-coupon bonds are a great investment choice if you are looking for a low-budget investment option available at a lesser risk.

How To Buy Zero-Coupon Bonds?

A dedicated account needs to be created for investors willing to invest in bonds online through trusted platforms like Bondsindia.com. These companies have facilitated KYC online. You need to enter the essential details and upload the document if required to

Complete your KYC online. For the trade or investment in bonds and your answer to the question - of how to buy zero-coupon bonds, the successful completion of KYC is mandatory.

Interested investors can choose to invest in zero-coupon bonds when it is issued by the government or corporates in the private and public category. Buying zero-coupon bonds in India is ideal for investors planning retirement, education of children, the marriage of a child, or another long-time goal.

You can choose to invest in zero-interest bonds online in a couple of minutes. Bonds can be bought through authorized banks and brokers. The periodic interest is the greatest attraction for a good percentage of the investors buying bonds. As you are aware that zero-coupon bonds do not pay interest, take your decision considering the essential factors and your aims in life. The face value in it is repaid at the end of maturity.

• Brokers: You can open a Demat and Trading Account with a registered broker and buy zero-coupon bonds through them.
• NSE and BSE Apps: You can buy the government-issued zero-coupon bonds through the mobile or web-based apps of NSE and BSE using the services of a facilitator or aggregator.
• RBI Retail Direct Scheme: The RBI Retail Direct Scheme is a recently launched scheme by the RBI through which you can buy government-issued zero-coupon bonds.

Every bond has its pros and cons. Zero-interest bonds are considered safe in comparison to equity. Some Bonds can help safeguard an investment portfolio from market volatility. It might help you diversify your portfolio and achieve your financial goals. It is better to avoid investment risks in different investment tools. For the same, you can consult an investment expert today.

Want to learn more about Finance knowledge.