Non-convertible debentures (NCDs) are one of the best ways of diversifying your investment portfolio. They are becoming an increasingly popular investment instrument, especially given their secure nature.
Following are 3 major benefits of investing in NCDs:
Higher interest rates
The interest rates provided by NCDs are much higher compared with the traditional bank fixed deposits (FDs). In fact, this becomes a major differentiating factor for the investor as far as NCDs are concerned largely because they will fetch higher returns to beat inflation compared with bank FDs. Further, NCDs are closely regulated by the RBI, which becomes a key feature that attracts investors towards this investment instrument.
Higher capital appreciation
Compared with traditional bank FDs, NCDs provide investors with higher appreciation of capital when locked for a long term. This becomes another attractive feature for investing in NCDs.
Generally, debentures provide an investor with either first or second charge on the assets of the issuer of NCDs. Therefore, this makes investment in NCDs much more secure and safer for investors compared with other forms of unsecured investment.
Despite being a highly lucrative investment option, NCDs can put investors at risk of losing capital. Thus, it is very crucial for investors to do their preliminary analysis of the financials of the company issuing the NCDs well before parking their funds.
This is where help from professional experts can come in really handy. They’ll not only provide you with all the relevant research and information on the company, but will also guide you appropriately. In fact, they become your investment planners and help you align the NCD investment with your overall objectives.
For more information on investing in NCDs, write us at [email protected]
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.