A company fixed deposit plan is one of the most attractive options for most people, especially if you’re a senior citizen. They offer great interest rates, and you can make a lot of money if you invest properly. But before you rush ahead and lock in your money, take a look at some of the things that you, as an investor, need to be aware of.
It’s Not as Safe as Bank Fixed Deposits
Although they promise higher return rates than bank fixed deposits, you should know that they’re not as stable and secure as the fixed deposits offered by banks are.
One of the major reasons is because these companies are private. If the company suddenly dies out, then you’ll be losing all your money, since they don’t have any backing of the RBI.
One way to avoid this is to invest in companies that have been there for a long period of time, and generally show a stable growth of business. Done properly, you can even earn monthly income by investing through these schemes.
TDS is Still Applicable
Just because you’re investing it through a private company doesn’t mean you’re exempt from TDS. If your income through the investment is 5,000 rupees or more, then you’ll be required to pay a TDS for that investment.
To avoid this, you can split up your investment into a number of small parts, ensuring that no one investment accumulates an interest of 5,000 rupees.
Done through a variety of companies and banks, you can have a monthly investment plan with high returns, that can double as a secondary salary for yourself.
Company Fixed Deposits are Rated by Agencies
Just because they’re private doesn’t mean you’re left to fend for yourself. Rating agencies such as Fitch can help you decide whether or not to invest in a particular deposit.
If you find that a certain company doesn’t have a good rating, then you can always move on and find another company that offers a better deal for you.
To invest in fixed deposit , you not only need to be aware of the money that you’re locking in, but also the company and bank that you’re entrusting your money with.
They Offer a Higher Interest Rate Than Banks
Typically, fixed deposit is known to have very low interest rates, which means it will take a long time to accrue a substantial amount from any capital that you invest.
This doesn’t have to be the case with company fixed deposits, since they offer a much higher rate of interest than what you would find at any bank.
They offer even higher rates of interest on FD if you’re a senior citizen. So, make the most of your money and invest in something that you know will yield a high return. With a high rate of interest such as what you find in company fixed deposits, it’s not all that difficult to earn monthly income by investing, thereby freeing up your cash resources.
Fixed deposits have been the favoured method of investing in India for a very long time, and for good reason. They’re very low risk and promise a good rate of return.
Company fixed deposits take that a step further, promising an even higher rate of return. If you really want to make your money work for you in a safe and relatively risk-free way, find a trusted company and invest in a fixed deposit with them. You won’t regret it.
Stories by Aman Khanna