Fixed deposits
You place a sum with a bank or deposit-taking institution for a fixed tenure at a stated rate. Interest may be paid periodically or at maturity. Premature withdrawal is often possible but may involve a penalty.
Bonds
You lend money to an issuer, which pays interest (coupon) and repays principal at maturity, subject to its ability to do so. Bond prices can move before maturity, especially when interest rates change.
Risks to understand
- Credit risk: the issuer may not meet its obligations.
- Interest-rate risk: bond prices can fall when rates rise.
- Liquidity risk: you may not be able to sell or withdraw when you wish, or only on unfavourable terms.
- Reinvestment risk: future rates may be lower when your investment matures.
See the full comparison table on our Fixed Deposits & Bonds page.
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