Comparison of the historical performance of tax-free bonds and other asset classes in India


performance of tax-free bonds and other asset classes in India 

There are many options for Indian investors when it comes to investing. Tax-free bonds are one such option. These bonds, issued by the government and its entities, offer investors a fixed-rate interest. These bonds are attractive investments for many investors because the interest earned is tax exempted. 

How does tax-free bond performance compare to other asset classes regarding historical performance? Let’s take an in-depth look. 


Stocks, also known as equity, are one of India’s best-performing asset classes over the long term. The BSE Sensex, India’s benchmark equity index, has returned around 12% annually over the past decade. The returns from equities can be highly volatile and affected by economic conditions, geopolitical events and company-specific factors like earnings and growth prospects. Equity investments are considered high-risk and high-reward investments. Fixed Deposits 

Fixed deposits are an attractive investment option in India. They offer investors a fixed interest rate. Fixed deposits have a lower interest rate than tax-free bonds. However, fixed deposits are considered a low-risk investment. Fixed deposits’ returns are not adjusted to inflation, and investors could lose their purchasing power. 

Mutual funds: 

Mutual funds are a popular option for Indian investors. They offer exposure to a variety of asset classes, including equities as well as debt. Some mutual funds have performed better than others in India, while others have been underperforming. Mutual funds can be subject to market risk. Investors should carefully assess the fund’s performance and portfolio composition before investing. 


For centuries, gold has been a popular option for Indian investors. It has provided consistent long-term returns. India’s historical gold performance has averaged 8%-10% per annum. This is lower than equities but higher than fixed deposits. But, gold prices can fluctuate due to global economic conditions and supply and demand factors, which can impact its performance. Real Estate: 

India has long been a country where real estate is a popular investment option. It has also delivered excellent returns over the long term. Real estate has had a historical performance of around 8%-10% per annum. This is comparable to gold’s returns. Real estate is an expensive investment that requires significant capital. Market fluctuations can also affect real estate prices and may be affected by other factors, such as economic conditions.

When comparing tax-free bonds’ historical performance with other asset types, it is important to remember that every asset class has unique characteristics, risks and returns. Historical returns for tax-free bonds were lower than those of equities but higher than fixed deposits. Investors who value capital preservation and steady income streams will find tax-free bonds a great investment choice. 

Conclusion: Tax-free bonds in India have provided steady returns for investors over the years and tax benefits. Before investing in any asset type, investors should carefully assess their risk tolerance and investment goals. Investors can achieve their long-term financial goals by having a well-diversified portfolio that includes a variety of asset classes.