Last month, I invested in debenture via my trading account. The experience was so flawless that I felt like sharing it with you guys. Let’s have a close look at how to buy debentures in zerodha. But before I set you in motion the context, I will brief out what exactly debentures mean so that you know the hack of it.
Also Read List of Government Bonds in India – Short-Term and Long-Term Bonds
What is Debentures in Zerodha?
A debenture is a debt instrument used by corporate houses and government agencies to raise capital. However, debentures are not backed by any collaterals, investors rely on the creditworthiness and reputation of the issuers.
While issuing the debentures, the interest rate has to be determined. It can either be fixed or floating. Debentures can be converted to equity shares after a specified time of hold hence it appeals more to the investors. In case of bankruptcy, debentures are being paid before common stockholders. Debentures come with a fixed maturity date but lesser tenuity as compared to bonds. As there are chances of default risk, hence the interest rates are high as compared to bonds issued by the government.
It is one of the best means to diversify your portfolio as debentures are less volatile and risky as compared to equity and offer more stable returns. The debt market works in reverse methodology as compared to the equity market. Therefore, when you see stocks falling, debt instrument demands increase. As they are tradeable on the stock exchange thereby providing liquidity without exit penalty, unlike FDs.
On Zerodha, you can buy Non-Convertible Debentures, Bonds/Tax-free bonds from the secondary market via your Zerodha Trading account. These are listed in the N series from N1 to N9 and NA to NZ. Apart from Zerodha, you can buy debentures and buy from other market players as well like Goldenpi.com, Indiabonds.com,bondsindia.com, etc.
Also Read What is the difference between Bond and Debenture?
How to Buy Debentures in Zerodha?
In order to buy or sell debentures, you need to have a Demat cum Trading account with your broking firm. In addition, it should be linked to your primary bank account.
There are two ways you can diversify your portfolio by investing in debentures via Zerodha:
- Trading in secondary market via Kite App or Kite Webpage.
- Directly investing in bonds/debentures via Coin App/Webpage via primary route.
Let’s have a close look at the steps to buy via Zerodha App
Also Read RBI RDG Account – Buy & Sell G-Secs, Bonds, T-bills, and State Development Loans
Kite App Steps
Time needed: 1 minute
Here are the steps to buy debentures on Kite App:
- Open the Kite App or webpage on your device
Here is the URL for Kite login: https://kite.zerodha.com/
You can key your username, password followed by the account pin for login. - Search for the Company Name or list of debenture
Once you login into your account, on the dashboard, just type the company name in the universal search box. It will load all the listed debenture under this company name. Let’s say I’m interested in buying Piramal Capital & Housing Finance Ltd’s Debenture. So type PCHFL in the search bar option.
- Choose the Option Buy
After choosing the debenture you like to invest in, click on the Buy option. A small window will pop up with pre-filled details you can edit the details as per your preference.
- Click on Buy Button
Now decide how many quantity you would like to buy with the investment horizon. In addition, you have an option to buy at the current market price or targeted price. After that, you can click on the Buy button.
- Order Completed
Once the order gets executed you will see a message on your screen order completed. In case you would like to track this order you can check under pending orders section as well.
Also Read IPO vs Shares(Listed) – Difference between IPO and Listed Stocks in India
Coin App Steps
Please find the following steps to buy direct bonds and debentures from Coin App:
Here is the Url for login on Coin: https://coin.zerodha.com/
Key in your credentials to get set started.
Once you log in to the coin app, go to the dashboard and choose Corporate bonds from the dropdown.
It will list out open issues at that point in time and you can choose the one where you want to park your funds for stable income.
Post selecting the bond/debenture you can click on Invest Button, a new window will open wherein no of units you have to mention. After that click on initiate order.
Provided you have sufficient balance in your linked bank account so that the order gets processed get successfully or else it will cancel. Most importantly, the payment will be deducted from your bank account instead from trading account.
Hope you like the article we tried to simplify the steps for you to make your life easy. Let us know if you have any feedback or issues pertaining to bond/debenture investment.
Also Read NFO in Zerodha – Which is Better NFO or IPO?
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