Corporate Bonds Offer 10% vs FDs at 7%, But Come Without Deposit Insurance

Corporate bonds are currently offering returns of around 10%, compared to roughly 7% offered by bank fixed deposits. While the 3% difference may seem attractive, the two instruments carry very different risk profiles. Bank fixed deposits are protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC), which insures deposits up to Rs 5 lakh per bank. Corporate bonds, however, carry no such government-backed insurance cover. Investors are therefore advised to weigh the higher yield against the absence of a safety net before chasing the extra returns.
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