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New bond offers must fit into your portfolio

Check if you need to invest in the asset class to which the bond belongs, then see if the bond has the right risk-return profile

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Harsh Roongta
“Should I invest in the bond issue of XYZ Finance Limited, which is paying 10 per cent?” Or, “Should I invest in the corporate deposit of ABC Housing Finance Limited?” These are questions I am asked often in the current low interest-rate environment.

This is the wrong question to ask. It is a bit like asking if a particular brand of tyre is suitable as a replacement tyre for your car. One cannot answer this question without knowing the kind of journeys you undertake, the destinations you want to reach, the kind of roads you will encounter, the kind of driver
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper