Fixed Investment: Safe and Secure investment strategy

  • Fixed Deposit
  • 5 Months ago
Fixed Investment: Safe and Secure investment strategy
HIGHLIGHTS

  • Types of fixed deposits
  • Features of Fixed Deposits
  • Why make Fixed Deposits? 


One of the best saving investment options in India that guarantee a higher return as compared to returns given by saving accounts are fixed deposits.

Types of fixed deposits

Cumulative Fixed deposits: The interest in cumulative fixed deposits is paid out annually i.e., at the time of maturity with the principal amount. All those who are looking to build a strong corpus choose the same.

Non-Cumulative Deposits: The interest paid to the depositor on which he or she agrees. There are various interest payout options available in Non-cumulative deposits like annual, half-yearly, or annually. It is best if you are looking for a regular income source to meet your daily financial needs.

Features of Fixed Deposits

  • Offering you a guaranteed return
  • No Market volatility risk
  • Gives you a capital investment protection
  • Offering tax-benefits, in case you are going with a tax-saving fixed deposit that comes with a 5-year plan
  • Can apply for a loan against the FD at a comparatively low-interest rate

Why make Fixed Deposits? 

There is a safety assurance when you keep your money in fixed deposits. You can check the ICRA or CRISIL ratings of the financial institutions and invest money in fixed deposits, be it corporate or bank FDs.

The fixed deposits are secured investments for retired people as almost 0.25% higher interest a senior citizen saving fixed deposit scheme is giving than standard fixed deposit schemes. Apart from that senior citizen is allowed to break his or her fixed deposit at times of any of the financial emergencies.

A nomination facility is also provided in the fixed deposit, proving it that fixed deposits are secured investments. Your money is only yours. In case of your demise, all the fixed deposit repayments along with interest will go to the nominee.

The auto-renewal facility available in fixed deposits is an easy process deposit withdrawal at the time of maturity.

No TDS should be deducted at the source on the fixed deposit interest rate up to Rs 5000 in a given financial year.

The loan against fixed deposit is available for the convenience of people. At the time of any financial emergencies, a fixed deposit holder is allowed to avail of up to 75% of the total principal deposit.

How to select an FD scheme?

Interest paid: Before choosing a fixed deposit, always compare the fixed deposit interest rate offered by the financial institutions. It will help in selecting a good deal.

The credibility of Fixed Deposit providers: Never get into a trap of higher-interest rate. Before investing your money in any of the fixed deposit schemes, especially when you are going for corporate deposits, check the FD provider credibility provider. Refer to an FD provider who is having ‘A-rated’ schemes. The best platform to check FD ratings are either ICRA or CRISIL ratings.

Tenure: It is also one of the most important factors to keep in mind. You need to choose the fixed tenure deposit carefully. Higher is the tenure, better will be the interest rate offered to you.

Penalty rates: It is quite common that one breaks his or her FDs to deal with the same at times of financial emergencies. So, before investing in fixed deposits, check the penalty charges also if you are withdrawing the deposit before the maturity period.

Interest pay-out option: Always choose that fixed deposit scheme that is offering you a wide range of options in terms of interest pay-outs. Payments are made annually, half-yearly, or quarterly, and a customer can choose any of the ones as per his or her financial requirements.

Top Performing Fixed deposit schemes

Here is the list of the Top Performing Company Fixed Deposits in India

Company Name

CRISIL Rating

Fixed Deposit interest rate

ICICI Home Finance Limited

CRISIL FAAA

6.15%

Mahindra Finance Limited

CRISIL FAAA

6.45%

Shri Ram City Union Finance Limited

CRISIL MAA+

8.40%

PNB Housing Finance Limited

CRISIL FAAA

6.70%

LIC Housing Finance Limited

CRISIL FAAA

5.75%

HDFC LTD

ICRA MAAA

6.25%

 

Significance of CRISIL ratings at the time of applying for company Fixed Deposits

CRISIL is one of the best global analytical platforms to check the company’s rating of their fixed deposit schemes. It is a great help to fixed deposit scheme investors who analyze the risk involved in investing in a particular bank or company. Secondly, it helps in bridging the gap between financial institutions and borrowers. CRISIL ratings make FD investment a transparent process

Here the CRISIL benchmarks for different types of fixed deposit ratings

CRISIL D

By Default

CRISIL C

High Risk

CRISIL B

Little safety

CRISIL A

Adequate security

CRISIL AA

High safety

CRISIL AAA

Highest safety

 

Interest rates are increasing, and investors are now looking for the top-performing AAA Fixed deposit schemes. At that time, rating agencies like CARE, ICRA, and CRISIL offered fixed deposit ratings of various companies and banks. Checking FD ratings before investing is necessary as, after the lockdown, the list is huge of the companies that are falling under the category of ‘ CRISIL D’ by making default on the payment of interest and principal amount to the investors.

How CRISIL rating and interest rate are related to each other?

The CRISIL ratings and interest rate are somehow related to each other. In most cases, the companies that are offering high-interest rates are high-risk companies with low creditworthiness. The companies that are offering standard interest rates are more secure investments. By the way of CRISIL ratings, one can differentiate between low and high-risk credit rating companies. It helps you in making safe investments.

The fixed deposit schemes of the bank and NBFCs are the most popular ones but many people are not aware of the benefits of investing money in corporate fixed deposits.

Here is the difference between bank fixed deposits and company fixed deposits.

 

Bank Fixed Deposit

Corporate Fixed Deposit

Rate of Interest

Average

High

Fixed deposit Tenure

Can be applied from months to years

6 months- 3 years

Risk Involved

Low

High

Medium of investment

Certificate of deposit

Certificate of deposit

 

Creating a corporate fixed deposit scheme is always the same as creating a bank deposit scheme. The only difference that occurs is here one applies through logging to the company's official website. The risk with company fixed deposits is a bit higher as compared to bank fixed deposits. But if you are doing proper research about the company and checking the CRISIL ratings, you will never make a wrong financial decision. The tenure period of corporate fixed deposit is less, but if chosen by the right company, it will help you get higher returns.

Choose a profitable secure investment fixed deposit plan 

Shriram City Finance is your trusted financial expert who will help you choose the best-fixed deposit scheme with a guaranteed return. Millions have chosen us for the term deposits and grow their savings above their expectations. Live all your dreams and grow financially by investing in the Shriram Unnati Finance deposits scheme. We will issue a fixed deposit certificate when you make FDs with us. Ours is a transparent process.