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What you need to know about ETF investing NCD investments

In this document, we look at two different forms of investment plans in India: Exchange-traded Funds and NCD Investments<br>

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What you need to know about ETF investing NCD investments

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  1. What You Need To Know About ETF Investing & NCD Investments Portfolio diversification is a very important part of investing and with numerous investment plans in India to choose from, financial planning opportunities are aplenty. In this article, we look at two different forms of investment plans in India: Exchange-traded Funds and NCD Investments Exchange-traded Funds (ETF) For young investors, who have minimal savings to invest, exploring exchange- traded funds or ETFs is an ideal option to begin first-time investments. What is an ETF? They are funds that invest into an underlying asset or portfolio of assets and trade over stock exchanges. The underlying portfolio may represent an index, securities or commodities. Going forward, the main thing to understand is the difference between ETFs and mutual funds – even tax saving mutual funds. Understanding the risks and benefits of the ETF investment strategy will allow you to pick the best investment plans in India to suit your financial situation. Low Cost of Investment: Not only is an ETF a simplistic investment, it’s a more cost-effective investment plan than even tax saving mutual funds. With an ETF, it’s one simple transaction, like purchasing a stock. This cuts down on fees and commissions. The low turnover also helps keep costs low. Tax Benefits: Dividends from ETF investment plans in India are tax exempt for investors. Capital gain taxes are incurred as the shares within the fund are traded during the life of the investment. Even considering tax saving mutual funds, an ETF scheme is more convenient. Flexible Investment: In today’s investment climate, an investor has the chance to choose from a variety of ETFs. The different types of ETFs available include commodity ETFs, style ETFs, country ETFs, etc that help track the performance of one’s financial goal. While tax saving mutual funds can also track your assets, there is more investment flexibility with an ETF.

  2. NCD Investment Debentures are long-term financial instruments issued by a company for specified tenure with a promise to pay fixed interest to the investor. An NCD investment includes those debentures which cannot be converted into shares or equities. The interest rates depend on the company issuing the NCD. An NCD investment offers better returns and good liquidity. NCD investments are easily tradable, listed on the open stock markets and exchanges. They also offer a lower risk because only companies with a good credit rating can issue a secured NCD investment. Keeping in mind portfolio diversification, these are two investment plans are quite different in nature but offer benefits in their own way. While an ETF offers you an exposure to a wide range of securities like an index and helps you spread investment risk and reduce stock-specific risk, an NCD investment provides you with income security. Ensure that you properly research about what investment scheme works the best for you before committing to an investment.

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