Making your money work for you is easier said than done. From The moment you make any interest in investments known, people around you may transform into a financial advisors. There won’t be any scarcity of solicited and unsolicited advice from family and friends. And, you just might witness the age-old debate between traditional and modern investors.
While watching battles of risk appetites from a distance, take notes. Some of those personal accounts could come in handy! But, hand-me-down information on personal finance isn’t enough to begin your investment journey. However, scouring the internet for unbiased opinions might confuse you even further. The best way to deal with this is to assess your future financial goals and timelines.
Create a chronological timeline based on financial obligations different age and income groups usher. Depending on those factors and others like education and marriage, plan your finances. Experts recommend investors diversify their investment portfolios with a clever mix of traditional and non-traditional instruments.
If this is your first rodeo with investing, consider starting with traditional investment instruments. They’re safe, offer low to moderate returns and are often easier to liquidate. For more competitive rates, you can explore those offered in fixed deposits – specifically, company fixed deposits.
Understanding Company Fixed Deposits
Both bank fixed deposits and company fixed deposits share similarities, but the latter could be more useful for you. Since raising capital through secure means like fixed deposits are more convenient. They’re preferred by most companies and NBFCs. Company fixed deposits provide investors with fixed and predictable returns free from market volatility.
So, you can continue investing in them without losing a portion to sudden market crashes. Moreover, unlike regular fixed deposits, they offer investors a higher interest. The maturity tenure for these fixed deposits ranges from 1 year to 5 years. Simply put, company fixed deposits offer 0.5% to 3% higher interest, even if the tenures match regular fixed deposits. And, the interest offered can go up to 8%, too!
In addition to providing a secure investment avenue, investors can avail a loan against the amount deposited. Typically they can get up to 75% of the deposit amount. Before you’re persuaded by their lucrative interest rates, learn the benefits of company fixed deposits.
5 Benefits of Investing in Company Fixed Deposits
Undeterred by unforeseeable market crashes, these fixed deposits offer secure returns over a period. While the returns earned aren’t as dynamic or profitable as mutual funds or other high-risk avenues, it’s a great way to wade past market volatility. And at the same time, it allows investors to make stable earnings.
Here are five benefits investors can reap over the tenure through a company fixed deposit.
- Tax Deductions
These benefits are arguably one of the biggest motivators for taxpayers to begin investing. That said, if the annual interest income received from a company fixed deposit is under ₹5,000, they’re eligible for tax deductions. In such cases, investors aren’t liable for income tax on the returns earned.
- Flexible Tenures
Speaking of motivators, investors are keen to seek instruments that offer flexibility in terms of liquidity. So, in case of a sudden financial emergency, they can prematurely withdraw the amount. However, company fixed deposits have a minimum lock-in period of 3 months.
Before settling on a company fixed deposit, verify their terms and conditions for premature withdrawals. It will allow you to identify any hidden charges or penalties for early withdrawals.
- Loan Against FD
After investing a considerable portion of their savings in a company fixed deposit, investors can avail a loan against it. While in a financial pickle, easily use these deposited funds as collateral to fulfil a business or personal requirements. Lenders will sanction up to 75% of the deposited amount, depending on the amount invested in the fixed deposit.
- Short-term Investment
These fixed deposits are great for financial obligations that investors may incur in the upcoming years. Since company fixed deposits have a maximum tenure of 5 years, it’s the ideal option for investors who want to make high returns within a short span.
- Nomination Facility
After investing in such avenues, it’s crucial that investors ensure that their dependents or next of kin are nominated under the fixed deposit. In case of the investor’s sudden demise, their nominee will receive the invested wealth.
Instead of letting your savings sit idle in a savings account, transfer it over to a company fixed deposit instead! It’s a lot more profitable in the short term, especially to fulfil big-ticket expenses. And, since you’re browsing for high-interest instruments, hop on over to Bajaj MARKETS and start investing today!