Why Choose Corporate FDs Over Bank FDs?

Corporate Fixed Deposits are quite similar to Bank Fixed Deposits albeit a few changes which is receiving a higher rate of interest as compared to Bank Fixed Deposits as the risk involved is higher too.

Fixed Deposits have been a trusted investment trend since generations within Indian families. With time, the way people invest their money has changed largely and fixed deposits have proven to be a reliable and lucrative tool time and again. Corporate FDs are provided by financial and non-banking financial companies (NBFCs). Such corporate FDs are offered by many big companies in India at attractive interest rates and credit ratings. Bank FDs, as the name suggests, are offered by banks at interest rates that vary from bank to bank.

While investing your money, one thing that everyone is wary of is how safe the investment is. Families who depend on returns from investments do not go for high risk investment options. That is why Corporate Fixed Deposits are a popular financial option because it remains one of the safest ways in the market to invest your money,though its always advisable to go with AAA or AA+ rating companies.There are many other opportunities to invest in the market such as bonds, stocks and mutual funds but these are all prone to market risks and are not well-suited for a risk averse investor. Of course, having a higher investment capital allows one to dabble in other ‘high risk - high return’ investment tools but it is always advisable to have safe investments like fixed deposits in your portfolio to cushion any loss that may occur when the market is not performing well. A corporate FD account shields a person from market risks by minimising it. Whether the household runs on salary basis or business basis, such low risk investments are preferred by and advised for all.

Corporate FD also offers the investor much higher interest rates than a Bank FD, hence higher returns, making it a preferred go-to method for most of the Indian population. Whether the returns come at regular intervals or after the complete tenure, the investor can choose the payout cycle. Families that depend on the interest payouts from their investments to run the household can go for monthly or quarterly payouts and those who are interested in long term investments can opt for the cumulative option. These deposits come in handy on a rainy day when there is an urgent need for money. Without having savings and depending solely on your monthly income, one is prone to facing financial difficulties during an economic meltdown. With fixed deposits, you always have something to fall back on - either by breaking the FD or offsetting a loan against the principal FD amount.

In conclusion, even though Corporate FDs have a slightly higher risk factor than Bank FDs, because of its reliability, availability, high interest rates and safe ROI, Corporate FDs are a great investment tool for citizens of all ages and financial backgrounds.