When it comes to safe investment options in India, fixed deposits (FDS) and non-convertible Debentures best of ncd (NCDs) are often one of the best options for conservative investors. Both offer certain returns and relatively low risk, but they are different in interest, liquidity, taxation and total risk profiles.  

What Are FDs?

Fixed deposits are offered by banks and NBFCs, so investors can park their money for a certain period and earn insured interest. Returns are not affected by market conditions, making them a popular option for risk individuals.

Key Features:

• Tenure: 7 days to 10 years

• Interest: Usually 6% to 8% (varies by bank and functional time)

• Capital Safety: High (especially in scheduled banks)

• Premature withdrawal: Allowed (with bot)

What Are NCDs?

non-convertible bonds are loan equipment issued by companies to raise capital. They do not convert to equity and pay a fixed interest rate (called coupon) at regular intervals.

Key Features

• Tenure: Typically, 1 to 10 years

• Interest: 8% to 11% (sometimes more)

• Capital Safety: Depends on the issuer's credit rating

• Liquidity: Tradable on stock exchanges (if listed)

Comparison: NCDS vs FDs

Function FDS NCDS

Return 6% - 8% 8% - 11%

The risk is very low (especially with banks), medium (depends on the issuer)

Liquidity simple

Tax rates: completely taxable interest rateis  fully taxable

Insurance cover no insurance up to 5 lakhs  

Minimum investment usually 1,000 or more, usually 10,000 or more

Who Should Choose What?

• Choose FDs if: You want capital safety, stable returns, and simple withdrawal options.
• Choose NCDs if: You seek better returns, can handle a bit more risk, and are comfortable evaluating credit ratings.

Who should be selected?

• Choose FDs: You will have capital safety, stable returns and simple withdrawal options.

• Choose NCDs: You will have better returns, handle slightly higher risk and are comfortable evaluating credit rating.

Conclusion

Both FDS and NCD hold their place in the diverse portfolio. If your goal is conservation of money with minimal risk, the FD is a safe choice. If you are a small measure of the more returns & can assess risk, NCD can be a rewarding alternative. Always think of your financial goals, risk tolerance, and investment horizon before choosing between the two.

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