Safety
It is less safe as compared to FD, RD and NSC because there lies a risk of default.
Although, secured debentures, backed by assets that depositors can claim if the company fails to repay.
Liquidity
NCDs are tradeable on stock exchanges. Hence, they possess considerable liquidity.
Returns
Return varies from company and has a direct relation to the risk profile of the company. Under the current scenario, interest rate varies from 8-13% p.a.
Taxation
Income earned from these instruments is taxable as per the slab applicable to the individual.
Safety
FD is one of the safest forms of investment, less prone to any risk.
Liquidity
FDs are not tradeable on exchange and returns are fixed subject to a lock-in period but premature withdrawal or closure will attract penalty charges.
Returns
FD returns are generally fixed which presently ranges from 6.96 to 8% p.a. It is generally higher than RD returns.
Taxation
Interest earned from FD is Taxable as per the slab applicable to the individual. Also, TDS is applicable if it exceeds ₹10,000 p.a.
Safety
RD is also one of the safest forms of investment, less prone to any risk.
Liquidity
Recurring Deposit is also a liquid instrument but premature withdrawal or closure will attract penalty charges.
Returns
The return on RD is also fixed. For a one-year term, the interest rate ranges from 5.25 percent to 7.70 percent. The rate of interest is usually determined by the length of time and the amount of money invested each month.
Taxation
Interest earned from RD is taxable as per the slab applicable to the individual. Also, TDS is applicable if it exceeds ₹10,000 p.a.(w.e.f.1st June 2015).
Safety
It is a highly safe instrument since it is backed by the government of India.
Liquidity
NSC schemes have a 5-year or 10-year lock-in period. The rate of interest on 10-year term NSCs is higher than the rate on 5-year term NSCs.
Returns
NSC’s also offer fixed returns ranging from 8.5 to 8.8%.
Taxation
Returns earned from NSC are exempted from income tax under section 80C of the Income Tax Act.
Safety
It is also a less safe instrument because there lies a risk of default by the issuer.
Liquidity
It is also a highly liquid instrument. However, interest rate movements can impact bond prices (especially longer-term bonds), and so the liquidity comes at the cost of price volatility.
Returns
Bonds provide the opportunity for capital appreciation as well as depreciation due to fluctuations in prices.
Taxation
Income earned from bonds is taxable as per the slab applicable to the individual, except tax-free bonds.
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