Bonds could be the missing piece in a retail investor’s portfolio. Even as equities gain prominence, bonds have yet to secure a permanent place in most portfolios. Yet, with safe instruments like fixed deposits barely keeping pace with inflation and equities prone to volatility, bonds offer a middle ground.
“This is the missing piece from a retail investor’s perspective. This asset class (bonds) is gaining prominence and may find a place in everybody’s portfolio in the next 5 years,” said Vineet Agrawal, co-founder of Jiraaf, a Securities and Exchange Board of India (Sebi)-regulated online bond platform, at the Mint Money Festival 2025 held in Bengaluru.
At the lowest end, instruments like G-secs and fixed deposits barely beat inflation, while equities can deliver strong long-term returns but remain volatile in the short term. Beyond that lie cryptos and angel investing, which offer higher potential returns but come with significantly greater risk.
Agrawal noted that what investors need is an instrument offering 8-13% returns with lower risk—and bonds fit the bill. “Bonds are the only instruments that give consistent returns, and you can choose among a wide variety of them, such as long-tenure and short-tenure ones.”
Bonds can also generate additional income. Our elders used to buy commercial or residential properties to rent out, but large sums of money had to be locked up in such investments.
With bonds, Agrawal explained, income generation can start with as little as ₹10,000. He cautions, however, that retail investors should avoid bonds rated below ‘BB’ despite their higher returns due to elevated risk.
“Bonds can also be useful to meet short- to medium-term goals like buying a car, as you have visibility on the cash flows. With a bond, you can get returns that are not market-linked and are short-term in nature,” he added.
While secured and well-rated bonds have low default rates, bond investing carries risks. Agrawal highlighted three: the issuer can go bankrupt, liquidity remains low if you want to sell before maturity (though this is expected to improve as retail bond markets mature), and interest rate changes can affect bond pricing.
