The name is Bond- Investment Bond!

The origin of bonds is a fascinating story. ‘Investment Bond’ originated sometime in the 1200’s in Europe. They were primarily instruments of public debt used by the government/monarchies to gather money from public for funding the numerous wars waged against each other.

In current times bonds have become an important part of personal finance as a major debt component. Each of us holds bonds in our portfolio, either directly or indirectly. You might hold bonds that you purchased as a part of the special tax deduction given to infrastructure bonds, your EPF money also is invested in bonds, you might have mutual funds that have bonds as the underlying asset.

Bond market impacts the world economy including the equity markets. Any rise in the interest rates means that the rates of borrowing funds go up. That means companies and individuals will get loans for various purposes at higher rates. Conversely lowering of rates means that cheaper loans will be available, which is likely to create an expansion of business and increase in spending by individuals. So the bond market ends up impacting everyone one way or the other.