Financial Stability in Unprecedented Times with Convertible Notes

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Financial Stability in Unprecedented Times with Convertible Notes

Are you a maiden/seasoned investor planning to invest in stock markets? Are you also prepared for the risk appetite? 

Just a few months ago, when the bull market was at all-time highs, COVID 19 came and spoiled the bull party. Stock markets’ crashes and volatilities unnerve even the most seasoned investors. In the era of COVID 19, we have experienced stock prices rise and plummet numerous times in a single day, which is a major risk to investment. On top of that, every time you buy or sell a share, a certain amount of money is shelled out to the broker which jeopardises the profitability. 

In the past 3 months, we witnessed the Dow Jones Industrial Average plunged around 6.9%, while the NASDAQ Composite dropped 5.3%. The year 2020 also marks the worst performance of BSE Sensex with the year’s low of around 25,638.90.

Also read: Square Yards Convertibles – An Innovative Fund Raising Strategy

In such volatile market conditions, investing in a hybrid asset class such as Convertible notes can prove to be a game-changer for you. Convertibles are a kind of debt instrument that offers the features of bonds with an added growth potential of common stocks. They provide fixed and higher returns, which also give them a huge edge over bank fixed deposits and other asset classes. Not just the upside potential, Convertibles Notes give you the downside protection with the fixed returns features, and whenever the common stocks don’t perform well, the debt features of convertibles-interest payments and claim on principal amount, provide the support. 

Most companies raise capital from a mix of equity and debt, amongst which convertible notes are a popular instrument for fund-raising. It’s one such hybrid instrument with a provision that allows it to be converted into a certain amount of equity investment after a predetermined length of time at some pre-defined terms.

Saumya Dixit An ardent believer of Karma, a sky gazer, a caffeine addict, and a professional story-teller, Saumya is associated with the marketing and communications industry for more than 7 years now. She believes words are a powerful force available to humankind, and we must choose them wisely. In her constant effort to live fully, she follows a consistent workout regime, enjoys different genres of music, sings karaoke and explores off-beat destinations.
Saumya Dixit An ardent believer of Karma, a sky gazer, a caffeine addict, and a professional story-teller, Saumya is associated with the marketing and communications industry for more than 7 years now. She believes words are a powerful force available to humankind, and we must choose them wisely. In her constant effort to live fully, she follows a consistent workout regime, enjoys different genres of music, sings karaoke and explores off-beat destinations.