ALL >> Investing---Finance >> View Article
3 Factors To Consider Before Making An Ncd Investment

Every person invests in assets and commodities to increase returns and earn high rates of interest on them. Some investments offer secured and guaranteed returns, whereas others are unsecured without the support of collaterals or security deposits. Hence, it is better to make wise investments and read the documents carefully to understand the terms and conditions against them. Though most of the investments offer standard functions, their rates of returns and tenure differ significantly.
Many people invest in debentures that are generally long-term and unsecured since they depend highly on the creditworthiness and reputation of the issuer. Large companies issue them to raise funds without any security and at fixed rates of interest. They are of various types, namely convertible and non-convertible debentures.
Convertible debentures give investors the option to convert them either into shares of the issuing company or in cash after a specific period. On the other hand, NCDs do not provide any options like the former at the time of maturity. Every investor wants to invest their funds in sustainable schemes. Trusted ...
... traditional investments are also affected by high market volatility, unlike an NCD investment that provides small but steady returns over time.
Be careful while handling them since they are highly affected by the nature of the business and the capacity to manage funds. They are also prone to business risks and threats.
Following are the factors that investors should consider before investing in such financial instruments:
1. The issuer’s credit rating: Credit ratings define the ability of the issuer to sustain and raise funds from internal and external sources. As these debentures do not provide an option, the credit rating depends entirely on the repayment capability of the issuer. Choose companies with a high score for reliable returns.
2. Debt level: It is essential to obtain the financial statements of the issuer are before investing in any asset to consider their debt-equity ratio. Do not consider investing in companies with more than 50 per cent investment in unsecured loans.
3. Provisions for non-performing assets: A company should always secure at least 50 per cent of its assets towards non-performing assets. It acts as a positive indicator of the asset quality of the company.
Many investors also invest in corporate bonds issued by corporations to raise funds for various reasons such as managing ongoing operations, mergers, and acquisitions or even business expansions. They offer long-term debts with a maturity of at least one year and are ideal for investors in search of a fixed but higher income from a safe option. They involve low risks and ensure capital protection to help investors achieve their financial goals.
Many investors also invest in corporate bonds issued by corporations to raise funds for various reasons such as managing ongoing operations, mergers, and acquisitions or even business expansions. They offer long-term debts with a maturity of at least one year and are ideal for investors in search of a fixed but higher income from a safe option. They involve low risks and ensure capital protection to help investors achieve their financial goals.
Author Bio:- Maithili Pawar is a financial expert with 5-plus years of experience in investment banking. In her free time, she writes on stock trading. Here, she has explained everything about NCD investment and factors to consider before doing so
Add Comment
Investing / Finance Articles
1. The Rise Of Investment Banking Companies In Hyderabad’s Financial SceneAuthor: Verity knowladge solutions
2. Globe Civil Projects Ipo Gmp 2025 | Price Band ₹67–71, Dates & Gmp ₹0
Author: finowings
3. Investing Ira Gold, California: Gold Ira Investment
Author: Gold and Silver Investment News
4. Expert Accounting Services In South Auckland: Supporting Growth In Manukau And Beyond
Author: WhizBiz
5. A Short Guide To Turn Your Pension Into An Annuity In The Uk
Author: Finance Advisor
6. Globe Civil Projects Ipo: Key Dates, Price Band & Gmp
Author: finowings
7. Why Hyderabad Is The Best City For First-time Homebuyers In 2025
Author: anilsinhaanni
8. Top Crypto Security Trends In 2025: What Every Investor Must Know?
Author: Xiaou Princess
9. Term Loan Vs Line Of Credit: What Hyderabad Businesses Should Know
Author: anilsinhaanni
10. How A Certificate Course In Retail Can Open Doors To High-paying Jobs
Author: sandeep
11. Leveraging Technology: How Virtual Cfos Utilize Tools For Financial Analytics
Author: Dipanjan Das
12. Top Features To Look For In A Stock Trading Platform
Author: Aman Kumar
13. Top Trade Credit Finance Solution Providers: A Substantial Guide For Businesses
Author: Merchant
14. Top Benefits Of Investing In Property Through Your Super In Australia
Author: Rick Lopez
15. The Effect Of Fee Structures On Investment Returns Over The Years
Author: Amit