NCD is a financial instrument issue by companies for defined tenure through public issues or private placement to collect capital/funds. It is not possible to turn this debt instrument into equity. Like bank fixed deposits, it is a fixed income instrument that can exchange on stock exchanges. Interest may collecte monthly/ quarterly/annually/cumulative, and the debenture holder charge the principal sum at maturity.
Benefits of investing in NCDs
- Compared to fixed deposits, postal savings, or similar assets, NCD has a higher interest rate.
- If the bonds are liste, liquidity can be sold on the secondary market before the bonds’ maturity.
- If the bond is liste, the bond sells at a price greater than the market cost price.
Features of NCDs
- In the past, NCDs offered interest rates that were very competitive relative to interest on other alternatives for fixed income.
- The tenure of NCD investment can be anywhere from two years to 20 years, thereby offering greater maturity opportunities.
- As the interest rate in the system increases, an NCD loses value when the interest rate decreases. When the NCD investment is until maturity, one is likely understan promise return, and the risk eliminates or reduce due to movement in interest rates.
- Certified and competent credit rating agencies rate NCDs.
- have typically liste shares, so they are sole before maturity in the secondary market.
Sovereign Gold Bonds
RBI-mandated certificates issued against grams of gold are sovereign gold bonds, enabling individuals to invest in gold without the burden of safeguarding their physical properties. As gold prices are less vulnerable to market volatility, the sovereign gold bond scheme serves as a safe investment tool for individuals. Such commodities appear to rise significantly over time, a highly prospective investment path, due to the popularity and widespread demand for gold.
Features of Sovereign Gold Bonds
- The 2020 sovereign gold bond prices are determined using a simple average of the closing prices set by the Indian Bullion and Jewellers Association Limited of 999 pure gold for the last three days.
- Gold bonds are issue for an eight-year term, with early withdrawal permissible from the 5th year onwards. Even at the market rate of gold, people may sell their securities on the secondary market.
After a critical holding period of five years, individuals willing to cash in their SGB investment can do so. This payout profit will exercise for the bond’s tenor for the 5th, 6th, and 7th years and will process the days of interest disbursement.