Is there a better option than the 11.5% coupon I get from a non-convertible debenture?

Transcript: The coupon looks very attractive. If it's not a very old bond or NCD, you need to worry about the quality of the debenture. If it is issued recently, then the return is too good to be true. As a recent NCD, such a high-return coupon will be backed by very high risk which you are not aware of. Before investing in NCD, you must always look at the rating of the NCD. If you park your money in NCDs like that and if the company defaults, then all your money gets stuck. Alternatively, mutual funds can be a better investment. Mutual fund also invests in NCDs but it will not be more than 3%. So, even if the NCD falters, it will be a small part of your capital. With NCDs, the upside isn't worth taking the risk.

This article was originally published on May 01, 2017.