Email question on IFCI Bonds

by Manshu on November 25, 2010

in Fixed Deposits

I got this email about the IFCI bonds, and I thought I’d paste my response here as well.

Q.

are these bonds same as shares
can we sell it on market or we have to sell it to the company itself
what is the locking period

A.

No, these bonds are not same as shares. Share prices go up and down every day, and can be quite volatile. Also, there is no guarantee that you will get a certain amount back at the end of the tenure.

These bonds will be locked in for 5 years, so you will not be able to trade them for that much time. They will then be listed on an exchange but will not be as volatile as regular stocks. They will pay you an interest, and also save tax which is not something stocks do. Think of bonds more like a fixed deposit than a stock.

Feel free to weigh in on the response, and add your comments!

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