Tata Capital announced availability of Secured NCD- Non Convertible Debentures. The issue opens till Feb 24.
Interest UP TO 12% per annum ( compounded annually ) for 5 years.
Should we buy Tata Capital's bonds or not ? Is it better / Safer than Fixed Deposits (FD) ?
Well to understand what is a bond, From Wikipedia
A Corporate Bond is a bond issued by a corporation. It is a bond that a corporation issues to raise money in order to expand its business. [1]The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date. (The term "commercial paper" is sometimes used for instruments with a shorter maturity.)
My take : (this may be fully wrong so read it at your own risk)
Buying bonds from a company (here Tata Capital assuming they are doing this for Tata Group) is like buying shares of one company. Investing in FD is like buying a mutual fund.
Well the benefit of buying a Mutual Fund diversifies your risk in to multiple companies, similarly buying a Fixed Deposit is like buying multiple companies' debt. So chances of loosing full money is lesser when investing in Fixed Deposit instead of bonds.
So buy the financial instrument based on your risk appetite. Personally I will not put my money in this bond as I am very risk averse seeing the current financial mess we are all in. OK one more point, I have already burnt my fingers in shares too.
Interest UP TO 12% per annum ( compounded annually ) for 5 years.
Should we buy Tata Capital's bonds or not ? Is it better / Safer than Fixed Deposits (FD) ?
Well to understand what is a bond, From Wikipedia
A Corporate Bond is a bond issued by a corporation. It is a bond that a corporation issues to raise money in order to expand its business. [1]The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date. (The term "commercial paper" is sometimes used for instruments with a shorter maturity.)
My take : (this may be fully wrong so read it at your own risk)
Buying bonds from a company (here Tata Capital assuming they are doing this for Tata Group) is like buying shares of one company. Investing in FD is like buying a mutual fund.
Well the benefit of buying a Mutual Fund diversifies your risk in to multiple companies, similarly buying a Fixed Deposit is like buying multiple companies' debt. So chances of loosing full money is lesser when investing in Fixed Deposit instead of bonds.
So buy the financial instrument based on your risk appetite. Personally I will not put my money in this bond as I am very risk averse seeing the current financial mess we are all in. OK one more point, I have already burnt my fingers in shares too.
No comments:
Post a Comment