Equity instruments and debt instruments have always been the two main types of investments for individual investors, including millennials. Equity instruments usually have a high return potential, but because they are tied to the stock market, their returns are subject to market risk. On the other hand, debt instruments like FDs and RDs have fixed returns that are much lower but more stable.

Retail investors in India, especially mid-income families, favored a debt-heavy portfolio with modest equity exposure up until a few decades ago; this opened the way to financial security in the country's then-slowly expanding economy. This isn't the case anymore, though. A change in financial goals, wealth is now the top life goal for 80% of millennials, according to a survey.

Having to deal with a lot of uncertainty during the pandemic has made millennials smart investors. They use the power of digital platforms to make financial decisions that help them reach their goals, even though the global economy is volatile and hard to predict. Research confirmed that more than 81% of digital investors (most of whom are millennials) started investing after the pandemic. This shows that millennials are becoming more and more concerned with their financial security.

An Opportunity To Diversify The Investment Portfolio

As millennials try to build a balanced portfolio that can make money during both times of high growth and high volatility, it becomes important to add low-risk, medium-return instruments, especially for short- and medium-term goals. Taking this kind of step is also important if one wants to save up money for emergencies.

This means that investors need to change their habits and look for investments other than mutual funds that can be researched, bought, and managed online. Second, they need to realize that the returns on traditional debt-based fixed-income instruments like FDs and RDs are lower than the rate of inflation right now.

Bonds and debentures, which are debt-based investments with fixed returns, offer an interesting chance. They give higher returns than FDs and RDs, are not tied to the market, require as little as Rs.10000 as a minimum investment, and let one choose how long they want to invest. Today, investors who want to diversify their portfolios without giving up the ease of digital personal finance platforms can look at, compare, and buy more than 100 bonds and debentures.

Bonds And Debentures: A Sorted Investment Option

Industry estimates put the value of the Indian bond market at USD 1.2 trillion Gsec, with USD 800 billion in corporate bonds growing at a CAGR of 12%. All digitally savvy investors, but especially digital native millennials, have a lot to gain from this change in the market.

Today, there are a lot of digital investment platforms that offer the same convenience as online mutual fund platforms, but for debt-focused products. They give investors full control over their bonds and debentures, which is important in today's fast-paced and flexible world.

But for millennials to get the most out of bonds and debentures, they need to keep going at a steady pace. Discipline is the key to a portfolio that does well, and this is especially true when it comes to non-market-linked instruments with fixed returns.

So, it is important to make sure that the terms of the bonds one chooses, match the time frame for their goal. Millennials should also keep in mind that bonds tend to give higher returns when the market is volatile, which makes them good "hedging" instruments.

To conclude, For millennials wanting access to alternative instruments, investing in bonds and debentures might be a beneficial prospect. They can help people diversify and get closer to their savings, investing, and wealth-creation goals in a relatively secure and simple manner.