Investment in debt securities is an excellent way to diversify your portfolio. They offer higher returns than shares, and you can support companies in New Zealand or social impact projects. Investment in debt securities also provides a more reliable income stream than shares. The Catalist public market makes it easy to invest in debt securities.
Debt securities are securities issued by companies that promise to repay the amount at maturity along with interest. The investor can make two types of investments: holding to maturity (investing in the security until it matures) or trading. The hold-to-maturity option is a long-term investment, while trading means holding it for a shorter period and selling it as soon as the price rises.
Interest on debt securities will be paid to the holder of the security, either on the value of the underlying asset or the interest rate. If the market goes down, the holder will receive a payment equal to the difference between the purchase price and the repayment price. The price payable upon repayment will be determined in the prospectus supplement.
These securities may be issued in a variety of forms, including fully registered global securities, bearer form, and classic note form. They are not insured by the Federal Deposit Insurance Corporation.