Why you shouldn’t invest in too many bond funds.

Investment in any financial product depends on the willingness and ability to take that much calculated risk by an individual or any other artificial person. Say, for example an individual earns rupees 20000 per month (non taxable) as it amounts to rupees 240000 per annum and invests rupees 1000 per month in S.I.P (systematic investment plan). By keeping some short term goal in mind. Now if suppose someone invests into multiple bonds will he/she be able to live a peaceful life ?. I mean will he/she be able to save enough. Savings are too an investment. Again as per relevant sections of Indian Income-Tax act, 1961 mainly only those deductions are allowed whichever are higher. Which means even though we invest in say, two (S.I.P) policies, only the higher amount is going to be deducted. Investment in too many bonds would also lead to trade cycles. I wish to say, because of fewer savings and higher expenditure there is always a chance for recession. After all premium is an expense. Thus investment in too many bonds is unadvisable and so, should be avoided.

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Published by shreyasshrikant

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