In India, traditional fixed deposits are often the very first savings and investment instrument that most people start their financial journey with. FDs are very popular because they guarantee safety and growth without jeopardising the capital amount as no risks are taken with the money. However, there are very few people who know that there is another kind of FD that you can invest in, as an individual, and that is the corporate FD.
What is a corporate FD and did you know that they are far more beneficial than even traditional FDs? Let's find out more about them.
While traditional FDs are offered by banks and even Non-Banking Financial Companies, corporate FDs are offered by corporate houses. Also called Non-Convertible Debentures (NCD), corporates offer these FDs as a means of raising funds for their own business expansion or maintenance, but they continue to offer all the benefits of traditional FDs. So, what makes them stand out from traditional FDs?
Corporate FDs can be opened by anyone who is an Indian resident. It can also be opened by other entities such as Hindu Undivided Families (HUFs), corporates, clubs, associations, societies, and partnership firms.
Before you start investing in a corporate FD, it would be wise to first make a list of all the FDs that are offered by reputed corporates. Compare their credit ratings. Next, compare the interest rates offered by different corporates. After that, compare the interest rates offered by the same corporate but within different tenures. Use an FD online calculator, which is free and easy to use, to calculate how much your interest amount and maturity amount will be.
Choose the right tenure and right corporate based on all these factors and you are sure to make the right choice with regard to the corporate FD that will give you the highest returns and maximum safety as well.
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