Why retail investors are looking beyond fixed deposits
Nikhil Aggarwal, Founder & CEO, Grip Invest, says that high-quality corporate bonds can offer returns 300–450 basis points higher than FDs for comparable tenures without significantly increasing risk.
- May 20, 2026,
- Updated May 20, 2026 6:30 PM IST
Amid the volatility in equity markets, traditional fixed-income options such as bank FDs lose some appeal due to falling rates, while corporate bonds are emerging as a potential middle ground for investors seeking stability with better yields. Retail participation in India’s bond market is also rising rapidly, driven by technology platforms, regulatory changes and growing investor awareness.
In this interaction with BT, Nikhil Aggarwal, Founder & CEO, Grip Invest, explains whether corporate bonds are becoming the new “stability bucket” in portfolios, how investors should assess risks, and why the asset class could be entering a broader retail adoption phase.
Q) With equities turning volatile and gold & silver already rallying sharply, are you seeing more retail investors shift toward corporate bonds as a “stability bucket” in their portfolios? What kind of allocation trends are emerging?
Nikhil Aggarwal: We are clearly seeing this trend play out on our platform. When equities become volatile, and gold has already seen a strong run-up, investors naturally begin asking where they can park money that generates returns without creating stress. Corporate bonds are increasingly becoming that answer.
What's interesting is that investors are not abandoning equities entirely. Instead, they are becoming more intentional about portfolio construction. Retail investors, especially those with a few years of investing experience, are increasingly thinking in terms of buckets such as growth, stability and liquidity. Corporate bonds are moving firmly into the stability bucket because they offer predictable cash flows, fixed maturities and yields meaningfully above FDs.
The timing is also important. Equity valuations remain elevated in some pockets, gold has rallied sharply, and FD rates are beginning to soften. In that environment, investment-grade corporate bonds yielding 9–12.5% look increasingly attractive. Corporate bonds have seen around 201% YoY growth in retail demand, with bond transactions reaching Rs 4,389 crore in April 2026, excluding large institutional transactions. We expect this momentum to continue over the next 12–18 months.
Q) For a typical retail investor who currently keeps most surplus money in FDs or savings accounts, how should they think about corporate bonds differently? What is the biggest misconception people still have about this asset class?
Aggarwal: The most common belief is that FDs are safe while everything else is risky. That is an oversimplification. High-quality corporate bonds can offer returns 300–450 basis points higher than FDs for comparable tenures without significantly increasing risk.
The biggest misconception is that bonds are either too complicated or only meant for institutions and HNIs. Historically, that perception existed because ticket sizes were large and processes were cumbersome. But that has changed significantly. Today, investors can start with relatively small amounts, choose tenures, review issuer profiles and receive regular payouts through digital platforms.
Another misconception is that all bonds are similar. They are not. Just as equities differ by market capitalisation, bonds differ by ratings such as AAA, AA, A and BBB. Risk and return vary across categories. For many retail investors, investment-grade bonds can provide a balanced combination of safety and returns.
Q) Many investors chase higher yields without fully understanding the risks. What should they evaluate before investing?
Aggarwal: Yield attracts attention, but investors should look deeper. First is the credit rating and, more importantly, understanding why a particular yield is being offered. A 12.5% yield from a lower-rated issuer and a 9.5% yield from a stronger issuer are very different propositions. Higher returns generally imply higher risk.
Second is issuer quality. Investors should understand who the borrower is, what industry they operate in, how their business is performing and their repayment track record.
Third is tenure fit. Investors should ensure that the bond maturity aligns with their financial goals and cash-flow requirements. Attractive returns matter little if the investment horizon does not match personal needs.
Q) How do corporate bonds compare with FDs today in terms of post-tax returns, liquidity and risk-reward balance?
Aggarwal: The comparison has shifted meaningfully in favour of bonds. Major bank FDs currently offer around 5.5–6%, and these rates may soften further as the interest rate cycle turns. Well-rated corporate bonds continue to offer yields in the 9–10% range, with some products delivering higher returns.
Tax treatment is broadly similar because interest income is taxed according to the investor's slab. However, the higher yields create a meaningful post-tax advantage, especially for investors in higher tax brackets.
Liquidity has also improved considerably. Digital platforms have addressed traditional liquidity concerns by enabling easier exits and secondary market participation.
The right approach is not to view FDs and bonds as competing products. FDs remain useful for emergency funds and short-term needs, while corporate bonds can support medium-term goals and portfolio stability. In a declining rate environment, investors may also benefit from bond price appreciation in addition to coupon income.
Q) What kind of investors are showing the strongest interest in corporate bonds today?
Aggarwal: The investor profile is becoming increasingly diverse. Retirees and senior citizens continue to show strong interest because they seek a predictable and regular income without equity-related volatility.
However, one of the fastest-growing categories includes salaried professionals aged 28–45 who are building diversified portfolios. These investors have often spent years investing through SIPs and equities and are now asking what their fixed-income allocation should look like beyond FDs.
They are not necessarily chasing the highest possible returns. Instead, they want a stable component that complements their growth assets. HNIs also continue to allocate significantly toward bonds for income generation and portfolio diversification.
Q) What has changed in recent years to make the bond market more accessible?
Aggarwal: The transformation has come from regulation, technology, awareness and product design working together. On the regulatory side, lower minimum investment requirements significantly expanded access for retail investors. Broader transparency measures and the Online Bond Platform Provider framework also created a more structured ecosystem.
Technology has made investing easier by bringing discovery, evaluation, investing and tracking into a seamless digital experience. Investor awareness has also improved, with many investors becoming more comfortable researching and understanding products independently. Product design has evolved too, with fixed tenures, regular payouts and curated opportunities making bonds easier to understand and adopt.
Q) Can corporate bonds realistically serve as a middle path between FDs and equities? How should investors use them?
Aggarwal: That is precisely the role they are designed to play. FDs often struggle to deliver meaningful real returns after accounting for inflation and taxes, while equities can be volatile in the short term. Corporate bonds occupy the middle ground by offering attractive yields, predictable cash flows and defined maturity periods, with manageable risk in the investment-grade segment.
From a portfolio perspective, allocating around 20–30% toward corporate bonds alongside equity investments and liquid assets can create a balanced structure. It helps smooth volatility while maintaining return potential and provides psychological comfort during uncertain markets.
Q) How could falling interest rates impact returns and opportunities in corporate bonds?
Aggarwal: A declining rate environment can become a strong tailwind for bond investors. The relationship is straightforward: when rates fall, existing bond prices generally rise. Investors who lock in higher yields today benefit in two ways. They continue receiving fixed coupon income while potentially benefiting from capital appreciation if they choose to sell before maturity.
As FD rates gradually decline, today's higher yields in quality bonds may become harder to find. That creates a potential opportunity for investors willing to lock in rates before further declines occur.
Q) Do you believe India is entering a phase where retail investors will increasingly build fixed-income portfolios beyond traditional FDs?
Aggarwal: I believe we are approaching an important inflexion point. The evolution resembles what happened with mutual funds and SIPs over the last decade. The key ingredients are now in place simultaneously — improved access, technology, favourable market conditions and rising awareness. Investors are no longer asking whether they should consider bonds; they are increasingly asking which bonds to buy and in what proportion.
Indian household financial assets are estimated to be approximately $19.3 trillion as of March 2026, with a disproportionate share sitting in FDs and savings accounts. Even a 10-15% reallocation toward well-rated corporate bonds would be transformational for this market. I genuinely believe we will look back at 2025-26 as the year that the shift began at scale, similar to how we now look at 2015-16 as the year SIPs truly went mainstream.
Amid the volatility in equity markets, traditional fixed-income options such as bank FDs lose some appeal due to falling rates, while corporate bonds are emerging as a potential middle ground for investors seeking stability with better yields. Retail participation in India’s bond market is also rising rapidly, driven by technology platforms, regulatory changes and growing investor awareness.
In this interaction with BT, Nikhil Aggarwal, Founder & CEO, Grip Invest, explains whether corporate bonds are becoming the new “stability bucket” in portfolios, how investors should assess risks, and why the asset class could be entering a broader retail adoption phase.
Q) With equities turning volatile and gold & silver already rallying sharply, are you seeing more retail investors shift toward corporate bonds as a “stability bucket” in their portfolios? What kind of allocation trends are emerging?
Nikhil Aggarwal: We are clearly seeing this trend play out on our platform. When equities become volatile, and gold has already seen a strong run-up, investors naturally begin asking where they can park money that generates returns without creating stress. Corporate bonds are increasingly becoming that answer.
What's interesting is that investors are not abandoning equities entirely. Instead, they are becoming more intentional about portfolio construction. Retail investors, especially those with a few years of investing experience, are increasingly thinking in terms of buckets such as growth, stability and liquidity. Corporate bonds are moving firmly into the stability bucket because they offer predictable cash flows, fixed maturities and yields meaningfully above FDs.
The timing is also important. Equity valuations remain elevated in some pockets, gold has rallied sharply, and FD rates are beginning to soften. In that environment, investment-grade corporate bonds yielding 9–12.5% look increasingly attractive. Corporate bonds have seen around 201% YoY growth in retail demand, with bond transactions reaching Rs 4,389 crore in April 2026, excluding large institutional transactions. We expect this momentum to continue over the next 12–18 months.
Q) For a typical retail investor who currently keeps most surplus money in FDs or savings accounts, how should they think about corporate bonds differently? What is the biggest misconception people still have about this asset class?
Aggarwal: The most common belief is that FDs are safe while everything else is risky. That is an oversimplification. High-quality corporate bonds can offer returns 300–450 basis points higher than FDs for comparable tenures without significantly increasing risk.
The biggest misconception is that bonds are either too complicated or only meant for institutions and HNIs. Historically, that perception existed because ticket sizes were large and processes were cumbersome. But that has changed significantly. Today, investors can start with relatively small amounts, choose tenures, review issuer profiles and receive regular payouts through digital platforms.
Another misconception is that all bonds are similar. They are not. Just as equities differ by market capitalisation, bonds differ by ratings such as AAA, AA, A and BBB. Risk and return vary across categories. For many retail investors, investment-grade bonds can provide a balanced combination of safety and returns.
Q) Many investors chase higher yields without fully understanding the risks. What should they evaluate before investing?
Aggarwal: Yield attracts attention, but investors should look deeper. First is the credit rating and, more importantly, understanding why a particular yield is being offered. A 12.5% yield from a lower-rated issuer and a 9.5% yield from a stronger issuer are very different propositions. Higher returns generally imply higher risk.
Second is issuer quality. Investors should understand who the borrower is, what industry they operate in, how their business is performing and their repayment track record.
Third is tenure fit. Investors should ensure that the bond maturity aligns with their financial goals and cash-flow requirements. Attractive returns matter little if the investment horizon does not match personal needs.
Q) How do corporate bonds compare with FDs today in terms of post-tax returns, liquidity and risk-reward balance?
Aggarwal: The comparison has shifted meaningfully in favour of bonds. Major bank FDs currently offer around 5.5–6%, and these rates may soften further as the interest rate cycle turns. Well-rated corporate bonds continue to offer yields in the 9–10% range, with some products delivering higher returns.
Tax treatment is broadly similar because interest income is taxed according to the investor's slab. However, the higher yields create a meaningful post-tax advantage, especially for investors in higher tax brackets.
Liquidity has also improved considerably. Digital platforms have addressed traditional liquidity concerns by enabling easier exits and secondary market participation.
The right approach is not to view FDs and bonds as competing products. FDs remain useful for emergency funds and short-term needs, while corporate bonds can support medium-term goals and portfolio stability. In a declining rate environment, investors may also benefit from bond price appreciation in addition to coupon income.
Q) What kind of investors are showing the strongest interest in corporate bonds today?
Aggarwal: The investor profile is becoming increasingly diverse. Retirees and senior citizens continue to show strong interest because they seek a predictable and regular income without equity-related volatility.
However, one of the fastest-growing categories includes salaried professionals aged 28–45 who are building diversified portfolios. These investors have often spent years investing through SIPs and equities and are now asking what their fixed-income allocation should look like beyond FDs.
They are not necessarily chasing the highest possible returns. Instead, they want a stable component that complements their growth assets. HNIs also continue to allocate significantly toward bonds for income generation and portfolio diversification.
Q) What has changed in recent years to make the bond market more accessible?
Aggarwal: The transformation has come from regulation, technology, awareness and product design working together. On the regulatory side, lower minimum investment requirements significantly expanded access for retail investors. Broader transparency measures and the Online Bond Platform Provider framework also created a more structured ecosystem.
Technology has made investing easier by bringing discovery, evaluation, investing and tracking into a seamless digital experience. Investor awareness has also improved, with many investors becoming more comfortable researching and understanding products independently. Product design has evolved too, with fixed tenures, regular payouts and curated opportunities making bonds easier to understand and adopt.
Q) Can corporate bonds realistically serve as a middle path between FDs and equities? How should investors use them?
Aggarwal: That is precisely the role they are designed to play. FDs often struggle to deliver meaningful real returns after accounting for inflation and taxes, while equities can be volatile in the short term. Corporate bonds occupy the middle ground by offering attractive yields, predictable cash flows and defined maturity periods, with manageable risk in the investment-grade segment.
From a portfolio perspective, allocating around 20–30% toward corporate bonds alongside equity investments and liquid assets can create a balanced structure. It helps smooth volatility while maintaining return potential and provides psychological comfort during uncertain markets.
Q) How could falling interest rates impact returns and opportunities in corporate bonds?
Aggarwal: A declining rate environment can become a strong tailwind for bond investors. The relationship is straightforward: when rates fall, existing bond prices generally rise. Investors who lock in higher yields today benefit in two ways. They continue receiving fixed coupon income while potentially benefiting from capital appreciation if they choose to sell before maturity.
As FD rates gradually decline, today's higher yields in quality bonds may become harder to find. That creates a potential opportunity for investors willing to lock in rates before further declines occur.
Q) Do you believe India is entering a phase where retail investors will increasingly build fixed-income portfolios beyond traditional FDs?
Aggarwal: I believe we are approaching an important inflexion point. The evolution resembles what happened with mutual funds and SIPs over the last decade. The key ingredients are now in place simultaneously — improved access, technology, favourable market conditions and rising awareness. Investors are no longer asking whether they should consider bonds; they are increasingly asking which bonds to buy and in what proportion.
Indian household financial assets are estimated to be approximately $19.3 trillion as of March 2026, with a disproportionate share sitting in FDs and savings accounts. Even a 10-15% reallocation toward well-rated corporate bonds would be transformational for this market. I genuinely believe we will look back at 2025-26 as the year that the shift began at scale, similar to how we now look at 2015-16 as the year SIPs truly went mainstream.