Debentures and Fixed Deposits! The difference between the two. Watch video:

Debentures and Fixed Deposits from Prerana Saraf on Vimeo.

There is always a confusion on whether one must invest in non convertible debentures or fixed deposits.

The video above explains the concepts and how they are different.

Investors are always looking out for opportunities that can give them attractive returns with less risk. Keeping this in mind, NCDs have become a popular option as it offers high returns at lesser risk with a choice of having long or short tenure. NCDs typically is company’s way of borrowing money from people for expanding their business, takeover and payment of loans.

As mentioned,  NCDs can be both secured as well as unsecured. In case of secured debentures, if the issuer is not able to fulfil its obligations, the assets are liquidated to repay the investors holding the debentures. Currently, NCDs are preferred as it offers higher interest than fixed deposits.

Companies are rated based on their performance. However, most people are scared to trust companies rather than banks! One can rely on banks and invest in fixed deposits if one is fine with 8-9% returns. However, for a return of 11% or more, one must be ready to take the risk.

Hope this was useful!

P.C. Pixabay

Related Posts Plugin for WordPress, Blogger...