Should we redeem long term bonds

I just read your article Should you invest in Long Term Debt funds or avoid and following is my query. My Dad aged now 87 and has purchased two Bonds in March 2015, the Bond value Rs. 10 Lakhs each. The coupon Rate rate given is 10.75% payable half yearly, till now we have received the interest 108000, Bond maturity is Aug 2072. Please advice whether it is good decision to redeem these Bonds and invest in Mutual Fund OR to continue with this bonds?

Apr 11, 2017 by Pankaj Gadkari, Mumbai | Mutual Fund

Our article was about investing in long term bond funds.

From you query it seems your father has bought some bonds (and not bond funds) with coupon rate of 10.75% payable half-yearly. Since you have not mentioned the name of the bonds we are unable to reply your query in details. However, the coupon rates of 10.75% is quite attractive for the long term. But more than the coupon rate, the rating of the bond is important. You should check the rating of the bond and if the rating is not satisfactory then selling the bond and investing in long term bond funds will make more sense.

However, if the rating is high and the credibility of the bond issuer is good then you may remain invested in the same.

Please let us know further details of the bonds, like issuer name, rating and terms and then we can review your query again.

Thanks for writing to us.

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