Short-term bonds mature within one to three years, carrying lower interest-rate risk than longer-tenure bonds — their prices move less when rates change. In India they typically yield 7–10% depending on credit rating. They are commonly held for near-term goals or to keep portfolio liquidity above fixed-deposit returns.
Short-term bonds maturing in 1-3 years sit between yield and flexibility on the bond spectrum. They typically carry lower interest rate risk than longer-tenure bonds — when interest rates rise, short-term bond prices fall less. They are commonly held by investors with near-term financial goals or those maintaining portfolio liquidity while seeking returns above fixed deposits.
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Why choose short-term bonds over long-term bonds?
Short-term bonds (1-3 year maturity) offer several advantages: lower interest rate risk (less price volatility), quicker access to principal, better visibility of issuer creditworthiness over a shorter period, and the ability to reinvest at potentially higher rates when they mature. The trade-off is typically lower yields compared to longer-term bonds.
What yields can you expect from short-term bonds in India?
Short-term corporate bonds in India typically yield 7-10% depending on credit rating. AAA-rated short-term bonds offer 7-8.5%, AA-rated bonds 8.5-10%, and A-rated or lower can offer 10%+. Government bonds of similar maturity yield around 6.5-7%.
Are short-term bonds suitable for emergency funds?
Short-term bonds carry settlement delay and potential price fluctuation, which is why investors typically hold emergency funds in liquid funds, savings accounts, or sweep FDs instead. Short-term bonds are commonly held for planned expenses 1-3 years out — for example a home down payment or education fees with a known timeline.
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Data is for informational purposes only. BondDekho is not SEBI-registered and does not provide investment advice. Bond yields and ratings are subject to change. Verify details on respective platforms before investing. Sorted by Yield to Maturity. Not a recommendation.