Fix Deposit: Despite the availability of many investment options, there are many people who still trust fixed deposits the most. Experts also believe that there should be many different schemes in your financial portfolio and everyone should include FD in their portfolio.
Usually people invest in bank and post office FD, but if you want to bring more profit and variety in the portfolio, then you can also invest in corporate FD. Here you can get better returns than bank FD and post office FD. Know the benefits here.
What is Corporate FD
Corporate FD is issued by many companies. Through corporate FD, companies raise funds from people to meet their needs. This FD also works exactly like a bank FD. For this, the company takes capital from investors for a fixed period and returns the money to the customers with interest. To attract people, better interest is given in corporate FD than bank FD.
How much profit can be earned?
If you invest in a bank, you will get 5 to 7 or 7.5% interest, but by investing in corporate FD you can get 8 to 10% return. Generally, the maturity period of corporate FD is 1 to 5 years. Like banks, the interest rate can be different for different periods.
Just like senior citizens are given additional interest on FD in banks, in many corporate FDs also senior citizens are given additional interest as compared to normal FD. But along with the high interest rate, there are some risks associated with corporate FD, which you should be aware of. If you can take the risk, then corporate FD can prove to be a better option for investment.
What are the risks of corporate FD
Generally, bank FD is considered a safe investment option, because strict rules of the Reserve Bank are followed in it. But corporate FD has a little more risk than bank FD.
If a bank collapses, the amount deposited gets insurance benefits under DICGC, but there is no such insurance on corporate FDs. If the company collapses, your money can also be lost. However, if you invest in companies with good ratings, the risk can be reduced to a great extent.
Choose a company to invest in corporate FD If you have decided to invest in corporate FD, invest only in companies with high credit ratings. Before investing in corporate FD, look at the 10-20 year record of that company. Invest only in those companies that are making profits. If companies with AAA or AA rating are offering FDs, then investment can be made in them.
