NCDs more attractive than FDs

Fixed income investors have had their share of returns at a time. Nowadays, NCD issues suggest good returns. Dewan Housing Finance Corp Limited (DHFL) launched its Rs 12,000 crore NCD issue, offering a coupon rate of up to 9.1%. It received subscriptions worth Rs 10,000 crore the very first day, getting fully subscribed soon after.

An investor needs to evaluate credit rating before putting money at risk. One should not blindly opt for higher yield.
“RBI is likely to hike interest rates in the near future. Investors should wait and watch before jumping in,” says Rohit Shah, CEO and Founder, Getting You Rich. Another option would be to deploy part of the surplus money at current rates. You can invest the remaining money as and when more attractive NCD offers come through. “There is no clarity on the interest rate situation. Rates may remain stagnant for some time. In this scenario, it would make sense to lock-in at current rates with part of investible surplus,” says Suresh Sadagopan, Founder, Ladder 7 Financial Services.