NCDs or Non-Convertible Debenture are fast gaining popularity among investors who want to scale up their real returns. So, if you are a tax-payer falling under lower slab rate then you can consider NCDs for the following reasons. Currently, the secondary market offers you a number of NCDs to lapup including the longer term NCD of NTPC, Dewan Housing Finance and Mahindra Finance.
1. Better Yield : Experts suggest depending on the maturity time as well as the quality of NCD, an yield anyway between 7.75% and 10% can be gained from investment in NCDs of corporates.
2. High liquidity: As the NCDs are available for trading on the exchanges, they offer the liquidity as good as FDs.
3. NO TDS deduction: Investor who maintains NCDs in th2eir demat account do not bear the cost of TDS as no tax is deducted at scource.
4. Interest Payout: Depending on your needs for cash, you can opt for NCDs with monthly, half-yearly or annual interest pay-outs.
5. Time to Maturity: Depending on your investment goals, you can buy a NCD for a short or long term. In contrast , other fixed income instruments such as bank FDs taken for a long time provide a rate of interest as low as 6.5%