In middle-class families, saving the money left after monthly expenses is a big support for the future. Fixed deposits are still the most reliable option for earning extra income. For this, people go to the post office or bank. In the post office, they prefer schemes like the National Savings Certificate or Kisan Vikas Patra, which double the amount in 10 years.
Bank FD vs Corporate FD: Which is the Better Option?
Both bank FDs and corporate FDs offer good returns. However, those more financially aware compare interest rates from different banks and choose the one that offers better returns. Understanding both options’ pros and cons is important before investing.
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Guaranteed Returns with Bank FD
Fixed deposits are suitable for those who prefer guaranteed returns. However, did you know that corporate FDs often offer higher returns than bank FDs? Still, they are not considered a better option than bank FDs. The main reason is investment security.
Since bank FDs are regulated by the Reserve Bank of India (RBI), they are considered safe. This means the invested amount and the promised returns are secured.
Risks Involved in Corporate FD
The biggest concern with corporate FDs is the risk of default by the issuing company. If the company fails to repay, investors may have to go through a long legal process to recover their money. Additionally, corporate FDs are not insured, increasing the risk further.
However, investing in corporate FDs with a good credit rating from reputed agencies can be relatively safer. In short, bank FDs offer lower returns with low risk, while corporate FDs offer higher returns with higher risk. A balanced investment in both can be a wise financial decision.