With equity markets sluggish in India and interest rates unusually high due to high inflation, companies, being unable to raise fresh equity capital , are trying to raise capital via corporate fixed deposits. These deposits are rated and investors can choose to invest in these deposits based on their risk appetite. Strong companies have almost negligible risk of defaulting while companies with very high debt has some risk of defaults on maturity. Hence the later pays higher interest rates on their deposits to compensate for the risk than the former.
If you aren't aware of all the benefits that corporate deposits provide then here are the eight reasons why you should seriously consider it.
1. If your risk appetite is low, fixed deposits are perfect for you. Since most of the instruments are rated, corporate fixed deposits have a very high safety level
2. Attractive returns at interest rates higher than Bank's Fixed Deposits
3. Higher Interest rates for senior citizens
4. High liquidity; most of these issuers offer 75% of the investment amount as loan @ 2% over the interest rate on the deposit, as well as a pre-mature withdrawal Option
5. Potential to earn compounding interest on your money by reinvesting the principal amount along with the interest earned
6. Flexible tenure - there are various tenures ranging from 1 to 7 years
7. You can choose interest frequency; most issuers offer monthly, quarterly, bi annual and annual cumulative deposits
8. You get direct ECS credit facility for interest payments or advance interest warrants for the year issued by most issuers
To know about the current offers on fixed deposits by several companies please consult your broker/financial consultant or email us at investorzclub@outlook.com
Thank's for your information. It's really nice and informative.
ReplyDeleteNeed for Corporate Decision Investment is nicely explained via 8 points in your post. Enjoyed reading it even though it is very old post.
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