What are the advantages of Bonds?

Investment in bonds is advantageous to customers in extensive ways. Due to the dependability of interest and principal returns, bonds have proved to be a stable investment option for customers averse to excessive risk in the market. The advantages thus include -

• Stability - Bonds are the long term investments and give assured returns. They provide low risk to the investor. Despite the higher dividend in equities, bonds are comparatively inelastic as compared to cyclical market fluctuations.
  
• Indentures - Bonds grant a legal guarantee that binds borrowers to return the principal amount to the creditors in due time. They are the financial contracts that have details like the par value, coupon rates, tenure, and credit ratings.
• Portfolio Diversification - Investors massively rely on investment in fixed-income debt instruments such as bonds to diversify their investment portfolio as they offer superior risk-adjusted returns on investment. Consequently, portfolio diversification reduces the possibility of short-term losses due to increased allocation of investment funds to fixed-income resources instead of solely depending on equities.