Corporate FD: Fixed Deposit (FD) will probably be the best investment option in the country. But apart from FD, there are some options which can give you more returns than that. One of these is investing in corporate or company FDs. You will get 5 to 6% interest on investing in the bank. On the other hand, you can earn much more by investing in corporate FDs. Interest is available from 7.5 to 8 on one-year corporate FD and 8 to 9 percent on five-year deposits. However, this option is more risky than FD.
What are Corporate FDs
Companies work to raise capital for their needs. Companies take capital from the investor for a fixed period which is called Corporate FD. Companies ask investors to invest through advertisements. To attract investors, companies pay more interest on this FD than banks and other finance companies. Because, these companies have the right to take deposits under the Companies Act. The interest rate on corporate FDs of companies is high, so it is better to invest in it.
The biggest reason why bank FDs are popular is that they are considered the safest for investment. Strict rules of Reserve Bank are followed in bank FDs. If the bank becomes insolvent, then even in such a situation, whatever may be the amount of FD, up to one lakh rupees will be protected under the Deposit Insurance and Credit Guarantee Corporation.
Corporate Fixed Deposits, on the other hand, do not have this type of security. But that does not mean that your investment is risky. Whenever you invest in a corporate FD of a company, first check the credit rating of that company.
If you are thinking of taking a corporate FD, then these things should be kept in mind:-
- If you want to take risk, then opt for Corporate FD
- Invest in a company with high credit rating
- If companies with AAA or AA ratings are offering FDs, then you can invest in them.
- Before investing in corporate FD, check the record of that company for 10-20 years.
- Invest in deposits of only those companies which are making profits.
- What are the risks associated with high interest rates should also be considered.
(ABP News here I am not advising to invest in any scheme. The information provided here is for informational purposes only. Take expert advice before depositing money in any scheme)