In this blog, I write on how I evaluate fixed income bond investments, including a checklist for selecting deals while make a small investment on a new platform I came across – TapInvest
Highlights
- 📋 Checklist: A basic checklist helps identify red flags before investing.
- 💰 Investment Amount: Start small. Dont rush into anything. Dont treat this like a Get Quick Rich Scheme.
- ⏳ Deal Duration: An 8-month deal offers a shorter & safer investment period
- 📈 Yield Comparison: Analyze yields across platforms and back-check yourself as well.
- 🏢 Company Overview: Thoroughly review company financials and ratings.
- 🔍 Risk Assessment: Always check the negative points in rating reports.
- ✅ Live Investment Process: Demonstrates the steps taken to invest in a chosen deal.
In recent years, many Indian investors have turned to fixed income instruments as a stable addition to their portfolios. Whether it’s bonds, invoice discounting, or other forms of debt, understanding how to evaluate these investments is crucial for mitigating risks and maximizing returns. In this blog post, I will share how I select fixed income deals, sharing a personal checklist that can help you identify red flags before making an investment.
Understanding Fixed Income Investments
Fixed income investments are financial instruments that provide returns in the form of fixed periodic payments and the eventual return of principal at maturity. Common types of fixed income securities include government bonds, corporate bonds, invoice financing, asset-backed securities and so on. As an investor, knowing how to assess these options is key to building a robust financial portfolio.
The Importance of a Checklist
Before diving into specific deals, it’s important to establish a checklist that allows you to systematically evaluate investment opportunities. This can help ensure that you don’t overlook critical factors that could affect your investment’s performance.
My Personal Investment Checklist
- Minimum Investment Amount: I encourage starting small, especially when exploring new platforms. A smaller investment allows for trial and error without exposing my portfolio to excessive risk.
- Maturity or Time Period: The maturity period is critical. I prefer deals with shorter durations, typically around 8 to 12 months. This allows for quicker returns and a more agile approach to reallocating funds.
- Instrument Type: Ensure that you understand what type of instrument you’re dealing with. In my case, I look for rated bonds, which provide an additional layer of credibility and safety.
- Yield and Coupon Rate: A high yield (XIRR) is attractive, and I often aim for yields above 15%. The coupon rate should also be competitive; a rate around 10-11% is generally acceptable.
- Credit Rating: Always check the credit rating of the instrument. An A or A- rating from reputable agencies like CRISIL, INDIA RATINGS, CARE, ICRA is preferable.
Comparing Deals on Different Platforms
After establishing the basic criteria, I often compare potential deals across different platforms. Recently, I came across a promising investment opportunity that I would like to delve into.
Case Study: Evaluating a Bond Investment
I found an 8-month bond with a rated yield of 15.5% and a coupon rate of 10.47%, rated A- by India Ratings. The minimum investment amount was ₹10,000, which met my criteria perfectly.
In comparison, I looked at another deal on a different platform. This option had a minimum investment amount of ₹1 lakh and an 11-month maturity with a yield of 13.5% and a rating of BBB. The higher minimum investment and lower yield did not align with my risk tolerance or investment strategy.
Company Analysis
Once the basic parameters look good, I focus on analyzing the company behind the investment. In this case, the company is Hel Infra, known for its significant growth and profitability. Here are some key financial metrics:
- Revenue: ₹14,000+ crore in FY24
- Profit After Tax (PAT): ~₹300 crore
- Cash Equivalents: A strong cash reserve indicates good liquidity.
- Debt-Equity Ratio: Acceptable Debt to Equity ratio reflects prudent financial management.
I dive deeper into the company’s financial documents and rating reports, focusing on both positive and negative aspects. It’s vital to identify any potential red flags, such as high debt levels or declining margins, that could impact the investment’s security.
Security Structure and Collaterals
A thorough examination of the security structure is essential. For this bond, the collateral provided is two times the secured obligations, which enhances the investment’s safety net. Always look for such layers of protection to mitigate risk.
Repayment History and NPA Analysis
Reviewing the repayment history of similar investments can also provide insight into the company’s reliability. For example, if a platform displays consistent repayment records for similar deals, it can significantly boost your confidence in making an investment.
Realizing Returns
Understanding the return schedule is key to anticipating profits. In the case of the Hella Infra bond, the expected returns and repayment structure were clearly laid out, allowing me to estimate the realized profits accurately.
Making the Investment
Once all criteria are met and I’ve completed my due diligence, I proceed with the investment. In my latest experience, I found the investment process straightforward and user-friendly. After making the payment, I could see the investment reflected in my dashboard, providing instant confirmation.
Ongoing Monitoring and Feedback
Investment doesn’t stop once you’ve committed funds. Regularly monitoring the performance of your investments and the underlying company is crucial. If you encounter any issues or discrepancies, addressing them early can save you from significant losses down the line.

Key Insights
- 🎯 Investment Strategy: Diversifying investments across multiple deals minimizes risk exposure. It’s crucial to test the waters with smaller amounts before committing larger sums.
- 🔄 Understanding Instruments: Different instruments like bonds and invoice discounting have varying risk profiles and yields, making it essential to compare them on various platforms.
- 📊 Financial Health: Analyzing company revenues, profits, and debt-to-equity ratios provides insight into the stability and risk associated with the investment.
- 🔎 Due Diligence: Reading through company documents and rating reports helps identify potential red flags, enhancing the decision-making process.
- 📰 Market Awareness: Keeping up with company news can provide additional context on potential investments and their future performance.
- 🌐 Platform Comparisons: Each investment platform presents information differently, which can affect the perceived attractiveness of various deals.
- 💸 Profit Realization: Understanding the timing of principal repayments versus coupon payments is crucial for realistic profit expectations.
Conclusion
Investing in fixed income instruments can be a rewarding experience if approached with caution and a well-structured strategy. By following a systematic checklist and conducting thorough due diligence, you can navigate the complex landscape of fixed income investing with confidence.
For Indian investors looking to diversify their portfolios, understanding how to evaluate fixed income deals is essential. This guide aims to provide the tools and insights needed to make informed investment decisions. Always remember, the key to successful investing lies in being informed, patient, and vigilant.
Feel free to share your thoughts or ask questions about my experiences below. Happy investing!
Disclaimer: I am not a registered SEBI advisor. This blog post is for informational purposes only and does not constitute financial advice. It is always recommended to consult with a qualified financial advisor before making any investment decisions.