What is Fixed Income?

Fixed Income Investments are those that offer a stream of return on a fixed schedule. The amount of the payout could vary though. One of the most common forms of this kind of investment is individual bonds. This category also includes the likes of bond funds, Post Office Savings Schemes, Company Deposit, Certificate of Deposit, exchange-traded funds (ETF) and money market funds.

Fixed Deposits

Fixed Deposits are deposits where a particular sum of money is invested for a fixed duration. The duration of Fixed Deposits is flexible. It can range from 7 days to 10 years. The rate of interest for the Fixed Deposit depends on the period for which the funds are locked in.

Just like a Recurring Deposit, a Fixed Deposit amount cannot be withdrawn until the maturity period. Premature withdrawal is allowed after the bank charges a penalty in the rate of interest. The minimum amount of investment for a Fixed Deposit is Rs. 5,000. The rate of interest on the Fixed Deposit ranges from 4% to 7.5%. You can also calculate your rate of interest using the FD calculator

Some banks provide the option of a sweep-out facility where the amount above a particular balance in a Savings Account is automatically converted to a Fixed Deposit. This helps the Savings Account earn more interest.


Debentures are debt tools; issued by companies to raise funds as loans from the public. It is an acknowledgement from a corporate entity that it has taken a loan from you. However, a debenture isn’t a secured loan. It is backed solely by the creditworthiness of the issuing firm. But it carries some amount of assurance. It is why, in India, if a company declares bankruptcy, debenture holders have the first claim over the company’s assets.

Categories of debentures

1. Perpetual Debentures

Perpetual debentures don’t have a maturity value and treated much like equities. These bonds create a lifelong stream of income for the investors, and they can trade those the market like equities.

2. Convertible Debentures

Some corporate give the offer to receive maturity value on debenture or get it converted to equity. This allows investors to alleviate some of the uncertainties associated with investing in unsecured bonds.

3. Non-convertible Debentures

It is a traditional type of bond that pays out the maturity and accrued interest at the end of the tenure without giving any opportunities to convert to equity.

Debentures can be either floating or fixed in nature. The payout on floating rate debenture varies with the market movement. But, for fixed-rate debentures, final payout remains assured.
It may worth mentioning that debentures and bonds are often confused, and both are used interchangeably, but they aren’t technically same.


Bonds refer to high-security debt instruments that enable an entity to raise funds and fulfill capital requirements. It is a category of debt that borrowers avail from individual investors for a specified tenure.

Organizations, including companies, governments, municipalities, and other entities, issue bonds for investors in primary markets. The corpus thus collected is used to fund business operations and infrastructural development by companies and governments alike.

54EC Bond

Selling capital assets and making a profit will result in taxation on those profits as capital gains. Nevertheless, there is a way to avoid this tax by investing the profits into specific assets. This is typically known as Capital gains exemption. We will be discussing one such exemption given under Section 54EC in detail.

Sovereign Gold Bonds

Sovereign Gold Bonds are government securities denominated in grams of gold issued by Reserve Bank of India on behalf of Government of India. They are alternatives for holding physical gold. The tenor of the Bond will be for a period of 8 years with exit option after 5 years and 6 months. On maturity, the investors will get the redemption proceedings in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment. The redemption proceedings will be credited to investors account automatically. At present the investors will get interest at 2.5% p.a credited semiannually to the bank account of the investor. RBI will issue Press Release stating interest rate of the Bond before new Issue


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