Corporate FD: Factors You Should Consider Before Investing
Most people are not overly concerned with returns as long as their capital is safe. This is a limited view of investments and how you should be choosing them. People generally tend to go for tax saving instruments and those shared by agents or friends and family. However, that option might not be appropriate for your financial needs or as per your risk appetite.
Consider different factors before deciding on investing –
- Does the option give you enough security of principal?
- Are the returns high enough to aid the accumulation of wealth?
- What are the associated features that you can avail of?
- Why is it better than other options in the same spectrum of risk?
As an investor aware of various investment schemes, you should first look at the best ones in the fixed-income category. If you were to compare a list of fixed income instruments – Company Fixed Deposits would top the list in terms of interest rates offered. These are fixed deposits offered by well-known companies on their credibility and they hope to gain deposits on the basis of their goodwill and past performances.
Their deposits are not insured like the Bank FDs which are insured by the DGIC up to Rs 1 lakh per depositor. Yet, these have been found to be highly beneficial in terms of creating a long-term corpus. Generally, well-known companies create an NBFC which has oversight by the Reserve Bank of India.
Things to consider before investing in a Company FD
If you are ready to invest in a company FD, take a moment to go through these factors which will strengthen your decision to go ahead.
Company FDs pay higher than Bank FDs – This is true as bank FDs tend to restrict their interest on the basis of their own MCLR (marginal cost of funds based lending rate). Whereas company FDs pay 1-2% higher interest. Among the company FDs, Bajaj Finance FD is the front runner in paying a starting interest of 8.60% to a new customer for 5 years with the rate going up to 8.95% for senior citizens.
Consider the guarantee and safety – Since there is no insurance by the government on company FDs, they are required to be assessed, audited, and rated by credit rating agencies on 14-point criteria on their credit score and repayment. Bajaj Finance FDs are rated one among the highest with MAAA (stable) rating from ICRA Ratings and FAAA stable rating from CRISIL. This means you can rest assured of any payments of principal and interest.
How ROI affects your corpus – When you look at a bank FD, it fails to even meet the inflation deduction and many times gives you negative returns. This affects your return on investment and you stay invested for long for nothing. Ensure to invest in a company FD like Bajaj Finance FD which gives you a minimum of 51% rate of return in your investments.
This is the simplest and most hassle-free way to get 51% ROI in just 5 years using Bajaj Finance Fixed Deposit.
Extra features you get in a Company FD – You should look at various other benefits you can avail of in a company FD. Some of them are as follows –
- Using an online FD calculator to understand how much principal you need for reaching a goal in a certain number of years. This will give you a realistic estimate of your financial goals
- Being able to take up to 75% of the maturity amount as a loan when in need of cheaper cash.
- Able to lock in a number of FDs in a series of successive maturities – called as Laddering to allow you have a build-up of the corpus.
More Read: PPD Or FD: Where Should You Invest.