Government bonds are an ideal investment option for those who want a risk-free, profitable and high-return investment. These government securities are sovereign or treasury bonds issued by the government for various purposes such as public works, infrastructure development and fund raising. The government offers fixed interest rates on such securities. It is offered for a period of months to years. At the end of the term, you can withdraw the amount with interest.

The importance of government bonds is that they are safe and can be invested without fear of market fluctuations. The interest rate on government bonds is mostly fixed, so the investor gets a clear picture of the savings. Although safe and profitable, it is essential to consult with a financial advisor before making large investments.

Types of Government Bonds available in India:

• Fixed Rate Bonds: The interest rate on fixed rate bonds, also known as coupon bonds, is fixed. The rate fixed at the time of investment will remain the same throughout the period and will not be affected by market fluctuations. Fixed rate bonds can have a tenure of 5 years to 40 years. These bonds are ideal for those who want long-term investments without risks.

• Sovereign Gold Bonds (SBG) Sovereign Gold Bonds are issued for the value of village gold. Investors can buy SGBs from post offices, banks and stock exchanges. The main attraction of SBG is that gold should be kept in hand so that expenses like locker charges can be avoided and the risk of theft or loss can also be avoided. SBG offers an interest rate of 2.5% per annum. The value of SBG is linked to the price of gold, so investors can benefit from the rising gold price as well as interest.

Inflation-Indexed Bonds: Capital and interest earned on such bonds are subject to inflation and deflation. Inflation-indexed bonds are issued specifically for retailers. It can be traded in the secondary market.

• 7.75% GOI Savings Bonds: The 7.75% GOI Savings Bonds are a savings bond with a tenure of 7 years. As the name suggests, the interest rate is 7.75% per annum. This is an ideal investment for those who want to earn a fixed income while avoiding risk.

Zero-coupon bonds: As the name suggests, zero-coupon bonds are bonds with no interest income. They earn their income through trade. You can buy existing bonds without having to issue new bonds. The profit margin of a zero-coupon bond is the difference between the price at the time of purchase and the price at the time of sale.

PSU Bonds: PSU bonds are bonds issued by public sector undertakings. These debt securities are issued by government-owned companies in India. They range from 5 to 15 years.

How to invest in government bonds

It is very easy to invest in government bonds in our country. For that, you can invest through GILT Mutual Funds or by creating a trading demat account with a bank.

Let's take a look at the 10 best government bonds in India:

1 Tamil Nadu Generation and Distribution Corporation Limited

2 Karnataka State Financial Corporation

3 West Bengal State Electricity Distribution Company Limited

4 Indal Money Limited

5 Punjab Infrastructure Development Board

6 Rajasthan State Road Transport Corporation

7 Rajasthan Rajya Vidyut Prasaran Nigam Limited

8 Kerala Financial Corporation

9 U.P. Power Corporation Limited

10 Greater Hyderabad Municipal Corporation