Point to be Note before Investing in Company Fixed Deposit
- Always Invest in good track record : Any Corporate which has strong track record of performance & profit generation. Check companies Balance Sheet for last 5 years.
- Check out reputation : If the Corporate has already issued such FD scheme in the past, then you can check if they made timely interest payout & proper principal repayment.
- Check company rating Ignore the unrated Corporate Deposit Schemes. Ignore deposit schemes of little known manufacturing companies. For NBFCs, RBI has made it mandatory to have an ‘A’ rating to be eligible to accept public deposits. One should go further and look at only AA or AAA schemes. If the credit rating of the fixed deposit is good, then that specific scheme may offer lower interest rates when compared to a poorly rated FD scheme.
- It is better to make shorter deposit of around 1 year to 3 years. This way, you can not only keep a watch on the company’s rating and servicing, but also have your money back in case of an emergency.
- Don’t Renew your FDR. First redeemed then if you want to reinvest again. This process help you to check companies service issues. If your Maturity amount credit in your account late then you decide can process again or not.
- Sector Selection : It is important to make sure that the sector to which the company belongs is a well performing one. So, make sure that you study the sector of the company and figure out if the sector is expected to perform steadily over the next 2-3 years.
- Interest Rate factor : If offer Interest Rate very high, it show that company is desperate to raise money and is willing to offer an unusually high rate of interest to attract investor. Depends upon you invest in this type of companies or not
- Tenure Vs Interest Rate : The longer the duration of the investment the higher the rate of interest you will get on your investment on fixed deposit.
- Diversify Don’t invest all money in single company, select min. 4-5 companies for investment. Don’t put more than 10% of your investment in any particular single companies FD.
- Involve your Financial Planner / Investment Adviser for advice in all your transactions. Do not bypass and invest directly. Adviser know about current market condition about specific company. Also trace yourself also. Some company pay higher brokerage for their product avoid this company.
Benefits of investing in Company Fixed Deposits:
– High interest.
– Short-term deposits.
– Lock-in period is only 6 months.
– No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one financial year
– Investment can be spread in more than one company, so that interest from one company does not exceed Rs 5,000
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