A 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 much more than that. One of them is an investment in corporate or company FD. You will get 5 to 6% interest in investing in the bank. At the same time, you can earn more than 10% by investing in corporate FD. However, this option is riskier than FD. Learn about this corporate FD.
Companies work to raise capital for their needs. Companies take capital from an investor for a fixed period, which is called corporate FD. Companies ask investors to invest in 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 company law. Companies have higher interest rates on corporate FDs, so it is better to invest in it.
The biggest reason for bank FD being popular is that it is considered the safest for investment. The strict rules of the Reserve Bank are followed in the bank FD. If the bank goes bankrupt, even in such a situation, the amount of FD, up to one lakh rupees, will be safe under the Deposit Insurance and Credit Guarantee Corporation.
Corporate fixed deposits, on the other hand, do not have such protection. But this does not mean that your investment is risky. Whenever you invest in the corporate FD of a company, first of all, check the credit rating of that company.
- If you are thinking of taking corporate FD then these things should be kept in mind: –
- If you want to take risk, then choose Corporate FD option
- Invest in a company with a high credit rating
- If companies with AAA or AA ratings are offering FD, then they can be invested.
- Before investing in corporate FD, see the record of 10-20 years of that company.
- Invest in deposits of the same companies that are making profits.
- What risks are associated with high-interest rates should also be considered.
Keep in mind that bank and company deposits are taxed according to the slab of income tax the investor comes in. Under the Income Tax Act 1961, if the interest on a bank FD exceeds Rs 10,000 in a year, then tax deduction (TDS) is made at the source. Its limit in company FD is Rs 5,000.