okay so I’ve been meaning to invest in bonds for like 6 months. keep seeing listings on BondScanner, the yields look good, but every time I try to figure out how to actually buy one I get confused and close the tab. can someone just tell me what to do step by step? assuming I know absolutely nothing
Not complicated at all once you break it into parts. Three things you need before buying your first bond: a demat account, a linked bank account, and KYC done.
If you already invest in stocks or mutual funds you almost certainly have all three. If not, open a demat with any broker – Zerodha, Groww, Angel One, Upstox. The process is fully online, PAN and Aadhaar only, takes about 15 minutes. Most offer free or near-zero charge accounts.
Once that is done, go to BondScanner, create an account, link your existing demat and bank account, complete their KYC, and you are ready to browse and buy. The bond gets credited to your demat after settlement, same as a stock would.
and what should I actually buy first. like what type of bond
Start boring. AAA rated, secured, 2 to 3 year tenure. Something like a REC bond or a large NBFC NCD rated AAA. You are not trying to maximise yield on your first purchase, you are trying to understand how the instrument works. A AAA secured bond at 7.5 to 8% is a better first buy than reaching for something at 10% when you do not yet have a framework to evaluate what makes that extra yield worth the risk.
how much do you need. is there a minimum
Rs 10,000 for most corporate bonds on platforms like BondScanner. That is one bond. You don’t need lakhs to start. Buy one bond, see how coupons get credited to your bank account, understand the process, and then scale up if you want.
One thing worth knowing before you pick anything. The yield shown on the platform is the YTM, yield to maturity. It accounts for the coupon payments plus any difference between what you pay today and the face value you receive at maturity. It is your actual annualised return if you hold to maturity and the issuer does not default. Check the credit rating, check whether the bond is secured or unsecured, check the tenure. Those three things matter more than the headline yield number.
this is actually helpful. so the whole process is: open demat if you don’t have one, register on BondScanner, link demat and bank, browse, buy. and the bond just sits in your demat and pays coupon to your bank account?
Exactly that. Coupon lands directly in your linked bank account on the payment date. At maturity the principal comes back the same way. You don’t have to do anything in between except check your demat statement once in a while to confirm the holding is showing correctly.
one more thing for a first-time buyer. don’t put everything in one bond. even if you are starting small, split across two different issuers. it is the single easiest way to reduce concentration risk without doing any complex analysis. same rating, same tenure, two different names.