Corporate fixed deposits are similar to standard fixed deposits in many ways. When it comes to, corporate FDs they are issued by Non-Banking Financial Companies (NBFCs) and other financial institutions whereas standard fixed deposits are issued by banks. Corporate FDs are mostly chosen for their higher returns than the standard bank FDs.
But the question arises, are corporate fixed deposits safe?
The answer to this question depends on various factors such as the credibility and financial stability of the company offering the fixed deposit, the interest rate being offered, and the terms and conditions of the investment.
Safety Factors to Consider In A Corporate Fixed Deposit
Investing in corporate fixed deposits can be a great way to earn a stable and attractive rate of return on your investment. However, as with any investment, it’s important to carefully consider the risks involved before making a decision.
Here are some key points to consider when evaluating the safety of corporate fixed deposits:
Credit Rating
It is important to check the credit rating of the company offering the fixed deposit. Credit rating agencies such as CRISIL, ICRA, CARE and few other agencies provide ratings based on the company’s financial stability, management quality, and ability to repay its debt. A high credit rating indicates a lower default risk and high degree of safety for the investor.
Interest Rate Offered
Higher returns come with higher risks. A company offering a very high-interest rate compared to other similar investments may indicate a higher risk. It is essential to do your research and compare interest rates offered by different companies before investing. Make sure to invest in corporate deposits from financial institutions with a greater customer base.
Financial Health of the Company
Before investing in a corporate FD, it is important to research the financial health of the company. This includes analysing its financial statements, understanding its business model and growth prospects, and evaluating its debt-to-equity ratio. If a company is highly leveraged or has a poor track record of profitability, it may not be a safe option for investment. It is necessary to do a research about the company before investing in their fixed deposit scheme.
Liquidity Risk
Corporate FDs are not as liquid as bank FDs, as they cannot be easily accessed before maturity. Investors should consider the liquidity risk before investing in a corporate FD, and only invest money that they do not need immediately, but there are a few corporate fixed deposits that provide flexibility in terms of fund liquidity with options such as premature withdrawal and loan against an FD to assist in times of financial needs.
Diversification
It is never wise to put all your eggs in one basket. Investing in corporate fixed deposits as a part of a diversified investment portfolio can help minimize risk, and earn attractive returns as well. If you are planning to invest in corporate fixed deposits, Shriram Fixed Deposit is an ideal choice. They provide you with interest rates as high as up to 9.10%*p.a. inclusive of a 0.50%*p.a. for senior citizens and 0.10%*p.a. for women depositors.
Advantages of Shriram Fixed Deposit
- High Degree of Safety:
Shriram Fixed Deposit has been accredited with “[ICRA]AA+ (Stable)” by ICRA and “IND AA+/Stable” by India Ratings and Research. This marks a high degree of safety on your savings.
- Attractive Interest Rates:
Shriram Fixed Deposits one of the highest rates for fixed deposits, ranging up to 9.10%*p.a. inclusive of an 0.50%*p.a. for senior citizens and 0.10%*p.a. for women depositors.
- Flexible Plans:
Investors can plan their fixed deposit investment based on their principal amount, tenure, type of payout desired. Calculate your returns before you make an investment decision.
- Hassle-Free Processing:
Applying for a Shriram Fixed Deposit is a hassle free online process which can be completed within 5 minutes with just 4 easy steps.
FAQs
- What are some of the advantages of investing in Shriram Fixed Deposits?
The Shriram Fixed Deposits offer high degree of safety, attractive interest rates, flexible tenures, assured returns and several other amazing benefits.
- What are the safety ratings of Shriram Fixed Deposits?
Shriram Unnati Fixed Deposits have been rated “[ICRA]AA+ (Stable)” by ICRA and “IND AA+/Stable” by India Rating and Research.
- What is the tenure available for Shriram Fixed Deposits?
The tenure for Shriram Fixed Deposit ranges from 12 months to 60 months.
- Should you make a corporate FD investment?
If you want to boost the returns on your investment, you could consider investing in corporate fixed deposits. A corporate FD is a smart way to diversify your investments while keeping the risk-reward balance in check. Corporate FD interest rates are greater than bank FD interest rates.
Key Highlights
- The 4 important factors that you should consider while investing in a corporate fixed deposit are: Credit rating, Interest rate, financial health of the company and fund liquidity.
- Corporate fixed deposits provide better returns than bank FDs.
- Shriram Fixed Deposits are safe and secure investments and are not subject to market risks.
- Shriram Fixed Deposits have been rated “[ICRA]AA+ (Stable)” by ICRA and “IND AA+/Stable” by India Rating and Research.