Why you should invest in a company fixed deposit
Company fixed deposits are comparatively better than bank fixed deposits as they offer higher interest rates. Bank FD rates change basis several factors, which are influenced by the interest rate movement decided by the Reserve Bank of India (RBI).
When investing in a company FD, you may want to choose issuers offering high interest rates. However, it is equally important to check for the credibility of the financier, failure of which may lead to a risk of delays or defaults. Hence, it is best to choose a safe company fixed deposit accredited with high stability ratings by credit rating agencies like CRISIL and ICRA.
What should you keep in mind when choosing a company fixed deposit?
- Safety ratings: Some company fixed deposits are officially certified by credit rating agencies such as CRISIL and ICRA on a 14-point rating system, which determines the assumed risk levels. These will assure you of the company’s fixed deposit stability from time to time. The higher the rating, the safer your investment. You can also compare the track record of company fixed deposit rates and determine those offering higher interest rates. For instance, Bajaj Finance Fixed Deposit has ratings of FAAA by CRISIL and MAAA by ICRA, which are the highest in the industry.
- Past repayment history: A company with timely interest payments and no default repayment of fixed deposits is ideal. For example, Bajaj Finance is one of the only NBFCs to have ‘0 unclaimed deposits’, indicating the highest safety of your deposit and the assurance of timely payments and default-free experience. Additionally, the trust of more than 3 lakh happy FD customers and a deposit book of over Rs. 25,000 crore is a testament that Bajaj Finance is one of the most reliable FD issuers.
Benefits of investing in a company fixed deposit
- Flexible periodic interest payout options: Companies like Bajaj Finance offer periodic payment options like monthly, quarterly and annually. These options can help you achieve a fixed income for your planned expenses. You also have the option to choose interest payout at maturity, which will help you create a sizeable corpus.
- No effect of market fluctuations: FD rates are pre-determined and free from market fluctuations, and with a company fixed deposit, you can also earn higher interest.
- Liquidity: A loan against a fixed deposit is readily available for up to 75% of the invested amount. Another way to achieve liquidity is the option of premature withdrawal with a minimal penalty.
- Additional rate benefits: Company FDs offer benefits such as revision of interest rate based on your investment tenor.
Senior citizens get an additional rate benefit of up to 0.25%. They can take advantage of the easy online application process from the comfort of their homes.
Bajaj Finance FD offers interest rates up to 7.05% for tenors of 36 months or more. You can also calculate your fixed deposit portfolio returns by using the online FD calculator. You can adjust the tenor and the principal amount and see the maturity amount you will receive. It is a simple and valuable tool for portfolio planning.