What are Non-Convertible Debentures (NCDs)?

If you are looking to build your financial future, then investing is what you should look forward to. Investing helps you grow your money exponentially, and there are many ways to do it. Over the years, different investment options have emerged, thereby, giving people more choices to grow their wealth. One of these options is Non-Convertible Debentures (NCDs).

In this blog, you will learn the meaning of non-convertible debentures (NCDs), how they work, and why they might be a good option for you. We will also explain how you can buy NCDs from the 13Karat app and what you should think about before making an investment.

What are Debentures?

Debentures are a type of loan that a company takes from investors. When a company needs money, instead of going to a bank, it can issue debentures to the public. People who buy these debentures are lending money to the company. In return, the company pays them interest at regular intervals, like every month or every year. At the end of the loan term, the company returns the original amount to the investors.

What are Non-Convertible Debentures?

Non-convertible debentures (NCDs) are a type of debenture that cannot be converted into company shares. Wondering what it means? Well, this means that, as an investor, you would not become a part-owner of the company. Instead, you would receive regular interest payments, and at the end of the term, you would get back the money you invested. NCDs are often seen as a safer investment compared to stocks because they offer fixed returns.

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Features of NCDs

Here are some important features of NCDs:

• Fixed Interest Rate: The NCD interest rate is fixed, and hence, you know exactly how much you will earn. This interest is usually paid out regularly. It could be every month or once a year.
• Investment Period: The period you need to keep your money invested in NCDs can range from 1 year to 15 years, depending on the specific NCD.
• Security: Some NCDs are secured, which means they are backed by the company’s assets. If the company cannot repay the money, these assets can be sold to repay investors.
• Tradable: NCDs are listed on stock exchanges, so you can sell them before the end of the investment period if you need to. However, the price you get may vary depending on market conditions.
• Taxation: The interest you earn on NCDs is subject to tax. However, if you hold the NCDs for more than a year, the gains may be taxed at a lower rate.

How to Purchase NCDs from 13Karat

If you want to buy NCDs, 13Karat is here to make it easy for you. Here’s how you can do it:

Step 1: Sign Up: First, create an account on the 13Karat app and provide some personal details to complete a verification process (KYC).
Step 2: Explore Options: After signing up, you can browse through the available investment options on the 13Karat app and choose NCDs.
Step 3: Choose and Invest: Decide how much you want to invest and follow the instructions on the platform to complete your purchase.
Step 4: Monitor Your Investment: With the 13Karat app, you can see your investments, track the NCD interest payments, and know when the NCD will mature.

Factors to Consider Before Investing in NCDs

Before you decide to invest in NCDs, here’s what you should consider:

• Check the credit rating of the NCDs. A higher rating means lower risk, while a lower rating indicates higher risk.
• Compare various NCD interest rates.
• Look at the financial health of the company issuing the NCDs.
• Think about how long you are willing to keep your money invested. Longer periods may offer better returns, but make sure you are comfortable with the time commitment.
• Be aware of the tax you would need to pay on the interest you earn from NCDs.

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Conclusion

So, non-convertible debentures (NCDs) are perfect if you are looking for a reliable investment option. You get regular income through interest payments and face less risk compared to stocks.

Now, if you are looking for a profitable NCD option, purchasing through 13Karat App could be a great choice. We offer a competitive rate of return at 16.1%, with an investment period of just 1 year and 10 days. It’s time to take advantage of this opportunity and grow your wealth. However, just remember that the minimum investment required is ₹1 lakh, so make sure this fits within your financial plan.