Fixed Deposits

FD's are one of the oldest and most common methods of investing. When it comes to assured returns, choosing the right type of savings scheme makes all the difference. Fixed Deposits let you make the most of value-added benefits as you create wealth at low risk.

Company Fixed Deposits

Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits.

Features and Benefits

  • Company Fixed Deposits offer comparatively higher returns than banks
  • Choose the best tenure for you from a wide range as per your convenience.
  • Company Fixed Deposits are non transferable that means there is no fear of FD receipt being stolen. In case it falls into wrong hands, it cannot be misused.
  • Premature encashment of deposit is available any time subject to payment of prescribed penalty.
  • Wide Choices-many companies operating in the Company Deposit market. This will help you decide whether to renew or reshuffle the deposit.
  • Attractive rates as applicable from time to time.
  • There is an old saying ["Don't Put All Your Eggs In One Basket".]
  • Company Deposits should be spread over a large number of companies. This will help you to diversify your risk among various companies/industries. Never put more than 10% of your total investible funds in one company.
  • TDS is deducted if the interest on fixed deposit exceeds Rs.5000/- in a financial year.
  • You can choose how frequently you want to recieve your interest payment Maturity, Yearly, Half-yearly, Quarterly, Monthly

How to choose a good company deposit scheme?

  • Ignore the unrated Company Deposit Schemes. Ignore deposit schemes of little known manufacturing companies. For NBFCs, RBI has made it mandatory to have an 'A' rating to be eligible to accept public deposits. One should go further and look at only AA or AAA schemes.
  • Within a given rating grade, choose the company with a better reputation.
  • Once you decide on a company, choose the schemes that have given a better return. Unless you need income regularly, you should prefer cumulative schemes to regular income options since the interest earned automatically gets reinvested at the same coupon rate, resulting in better yields. It also gives you a lump-sum amount at one go.
  • It is better to make shorter deposit of around 1 year to 3 years. This way, you can not only keep a watch on the company's rating and servicing, but also have your money back in case of an emergency.
  • Check on the servicing standards of the company. You should not invest in companies that care little about investor services, like promptly sending interest warrants or the principal cheque.
  • Involve your Financial Planner / Investment Advisor for advice in all your transactions. Do not bypass and invest directly.
  • Check whether the company accepts outstation cheques and makes payment through at par cheques, especially if you do not live in the same city where the company is situated.

Companies where you should not invest:

  • Companies that offer interest higher than 15%.
  • Companies that are not paying regular dividends to the shareholders.
  • Companies whose Balance Sheet shows losses.
  • Companies that are below investment grade (A) or less rating
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