Top 10 aspects you must be aware of before investing in a company fixed deposit:

When you are talking about any investment, the word Fixed Deposits is the first or second thing that strikes your mind. When it comes to a financial institution’s fixed deposits, they are known to be everyone’s option. Generally, most of us must have our fixed deposit accounts in a different financial institution. A company fixed deposit generally offers 1% to 3% higher interest rates than other financial institutions offer for the same period.

What does a company fixed deposit?

A Company’s Fixed Deposit or Company Term Deposit is a kind of Fixed Deposit issued by the companies such as finance companies, housing finance companies and other NBFCs. Fixed deposits are one of the great ways by which you can grow your money quickly. However, it is basically rated for its credibility by the rating agencies such as ICRA, CARE, CRISIL and many more.

Before you select a company fixed deposit:                  

Greater Interest Rates: The interest in these companies is comparatively much higher than what is given by a financial institution. However, corporate Fixed Deposits are the one that pays even more than 9.00% interest per annum.

Regular Interest deposit choices: It helps you with various interest deposit choices in a company. You can easily select monthly, quarterly, half-yearly, and yearly choices depending on your requirement.

Credit Ranking: It is ranked by an autonomous agency like ICRA and CRISIL. It provides customers with an opportunity to opt for a well-ranked fixed deposit.

Unappealing Post-Tax Repay: A company’s fixed deposit can be tempting due to the high interest. But, if you come under 30% of the tax, the interest that you have earned on your company FDs will be subjected entirely to tax. And, you will be able to enjoy with no tax benefits.

Risky: A financial institution FDs comes with a specific guarantee and deposit insurance, whereas company FDs are somewhat risky. However, it is an absolute must to be aware of the risk factor involved before investing in such an FD scheme. And, this risk can be minimised easily to an extent by going for a well-rated company scheme.

Penalties based on Pre-Mature: It will lead to a cash crunch for the business in case of not going into a financial phase. The majority of companies will charge a penalty if you withdraw your money before the maturity period.

Risks of pre-mature: It will lead to a cash crunch. Another risk is in case the company is not doing well and you have invested in the wrong company, you might not receive any returns even after the maturity period. So, before opting, think twice before you choose your investment company.

Check the Company’s Track Record: Before investing in a particular company before reinvesting, you must be aware. You must do proper research to choose the company. However, you can also check its track record and know its financial status.

Attain nominee: You must attain a nominee to select a company’s Fixed deposit. Its necessary for the investor as life can get unpredictable. The amount will be given to the nominee in that case.

Be aware of the terms: You have an application to fill in and sign. And, at the same time, you will be required to read it with caution and become aware of every condition involved. It will minimise your confusion, and you will become even more confident. 

A company’s fixed deposit is always an excellent option to invest in. It gives you more returns than the usual FDs. And it also helps you to grow your money in a better way. You must always do the necessary research before selecting one. However, overall it is an excellent option for investment, but at the same time, it is risky as well. So, you have to be innovative and choose your company wisely.

Leave a Reply

Your email address will not be published. Required fields are marked *