Investment Bonds are meant solely for investment purposes where the aim of the investor is growth of capital on a long term perspective. This bond can also be purchased by the investors for getting a stream of regular income. Hence the Investment Bonds can serve the purpose of either of the two or both. The range of time for which this bond is chosen completely depends on the financial goals of the concerned person. The other associated actors that come into play at the time of choosing the Investment Bonds are
the extent of risks associated with the type of investment bond
the tax profile of the concerned investor
The most coveted aspect that should be remembered by an investor before investing in the Investment Bonds is Diversification. The market affects the different class of assets differently and at different extent. Hence it is most desired that an investor invests his hard earned money in different asset classes so that his exposure to the risk diminishes and at the same time the return he gets is enough for the capital appreciation. Hence, the financial advisers advice that in case of investment in the Investment Bonds category, one must diversify his funds among the same category but different issuing companies. At the same time it is also advisable that the an investor should choose the bonds having different time periods of maturities which help them to hedge the risks associated with interest rate fluctuations.
The Investment Bonds are also known as the Insurance Bonds and entitles the investors to invest their money in the same for acquiring a policy meant for life insurance but here the premium that is to be paid by the investor is a one time one.
Investment in the Investment Bonds do attract tax and are especially meant for growth in the invested fund. This investment has certain major advantages with it related to the tax. The investors in this segment of bond don't have to declare their tax payment amounts on a yearly basis, provided the investment in this category for at least ten years. This investment also allows the investor to pay his or her regular taxes at the rate as was applicable at the time of investment. This tax would be fixed for the individual for the coming ten years.
These investments are also of the short term span where there is no associated time limit for the investment. The investor can square off the same at anytime by simply selling off the units. In addition to this, the investors could also increase their already made investment through through topping up the already made investment. The investors are also facilitated in shifting their funds from one type of investment bonds to another one if the goal or the strategy of the investor changes.