Invest in Corporate FD for more profit, keep these things in mind

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 returns than that. One of these is investing in corporate or company FDs. You will get 5 to 6% interest on investing in the bank. On the other hand, you can earn more than 10% by investing in Corporate FD. However, this option is more risky than FD.

Companies work to raise capital for their needs. Companies take capital from the investor for a fixed period which is called Corporate FD. Companies ask investors to invest through 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 the Companies Act. Corporate FDs of companies have higher interest rates, so it is better to invest in them.

how safe
The biggest reason for the popularity of bank FDs is that it is considered the safest for investment. Strict rules of Reserve Bank are followed in bank FDs. If the bank becomes insolvent, then even in such a situation, the amount of FD up to one lakh rupees will be protected under the Deposit Insurance and Credit Guarantee Corporation.

Corporate Fixed Deposits, on the other hand, do not have such protection. But that does not mean that your investment is risky. Whenever you invest in a corporate FD of a company, first check the credit rating of that company.

If you are thinking of taking a corporate FD, then these things should be kept in mind:-

  • If you want to take risk then opt for Corporate FD
  • Invest in a company with high credit rating
  • If companies with AAA or AA ratings are offering FDs, then you can invest in them.
  • Before investing in a corporate FD, look at the 10-20 years record of that company.
  • Invest in deposits of only those companies which are making profits.
  • What are the risks associated with higher interest rates should also be considered.

tax benefit
Keep in mind that bank and company deposits are taxed according to the income tax slab the investor falls in. Under the Income Tax Act, 1961, if the interest on bank FDs exceeds Rs 10,000 in a year, then tax deducted at source (TDS) is made. Its limit in company FD is Rs 5,000.

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