Why should one invest in a NCD, when we can earn a tax free yield of >8% by investing in Debt related MFs?



1.Why should one invest in a NCD, when we can earn a tax free yield of > 8 % by investing in Debt related Mutual Fund schemes ? Investment in Mutual Funds gets you more tax efficient returns.

2 Replies to “Why should one invest in a NCD, when we can earn a tax free yield of >8% by investing in Debt related MFs?”

  1. NCD HAS NO LOCK-IN PERIOD.
    If NCD is sold after one year, 10% capital gain tax only to be paid.
    NCD is safer than Equity/MutualFund.
    NCDs of more stable companies are available.


  2. it comes down to the basic finance equation

    with risk comes reward. Debt related MFs have a higher risk, 8% is a descent average when you compare them to interest rates on premium savings accounts and CDs. They also have a higher chance to default.





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