Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

Tuesday 11 March 2014

Non-Convertible Debentures

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

Non Convertible Debentures

 

Most of us are conservative when it comes to investing hard earned money. We prefer to invest in secure investment options. But for higher returns we need to take risk. As it is rightly said - no risk no profit.

There are financial instruments such as Non-Convertible Debentures, which work better than fixed deposits when it comes to returns. Before we research into the factors that make Non-Convertible Debentures more attractive than other fixed income instruments let us look at what Debentures are.

A debenture is an instrument used for borrowing by companies, which may be secured or unsecured by physical or collateral assets. It means if the company fails to pay its obligations, these assets can be liquidated to pay investors’ money in case they are secured. Independent rating agencies like ICRA, CRISIL rate the companies as AA or A+. It is advisable for investors to invest in companies with higher rating and not go solely by the interest rates offered on the debentures.

Following are the points which one should keep in mind before investing in Non- convertible debentures:-

  • Liquidity: Fixed Deposits by banks can be liquidated at any time for a small penalty. However, this may not be possible when it comes to debentures. Nevertheless, from a returns perspective, debentures are better compared to other fixed income instruments.
  • Risk: Risks are high in case of non-convertible debentures as companies might face loss at any time. Further, unsecured Non-Convertible Debentures have no underlying assets as security that is the reason why unsecured Non-Convertible Debentures give more returns than secured ones. Consider the rating of the issuer and the issue itself before investing, especially if you do not have much knowledge about the business model of the company issuing the debentures. 
  • Tax: From income tax point of view, rate of interest on debentures is income from other sources, which is clubbed under ‘Income from other sources’ head and charged at slab rate applicable to an individual. If an investor is selling this debenture before maturity, capital gains tax is attracted on the premium.
  • Traded in Stock Exchange: Non convertible debentures are listed on stock exchanges and can be traded as shares. However if the market interest rate is higher than the coupon rate then the debenture must be sold at a lower price and vice versa if the market rate is higher than the coupon rate. These instruments can also be converted into cash.
  • Maturity: Maturity of debentures varies from one issue to another. As per RBI stipulations, minimum time for maturity must not be less than 90 days and maximum can be 20 years. You can invest either in a short term debenture or one with a long maturity period as per your preference, in line with your financial goals.
  • History Of Company: As mentioned earlier, it is advisable to base your purchase decision based on ratings given by independent agencies. However, you must do your own research on the company’s health before investing in its issue. If the company has defaulted in payment earlier it is  not advisable to invest in its offering.

Investment in debentures must be considered after taking into account your risk-return profile, liquidity preferences and the period for which you want to stay invested. Think wise and invest wise.    

For further information contact Prajna Capitalon 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap FundsInvest Online

      1. DSP BlackRock MicroCap Fund

2.Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

No comments:

Post a Comment

Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

Popular Posts

Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications