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Fixed deposits have been a reliable means of investment for years. People who do not want to take any kind of risk in terms of investment, prefer to invest in FD. Investors get guaranteed returns in FD, so they are confident that their money will be completely safe. Usually, you invest in bank or post office fixed deposits. But if you want, you can also invest in corporate FD. You can get very good returns on this. Know what is corporate FD, what are its features, and how different it is from bank FD in terms of profit.

Know how different is corporate FD from bank FD.

Bank FD is issued by banks, but corporate FD is issued by many companies. Through corporate FD, companies raise funds from people to meet their needs. This FD also works exactly like a bank FD. For this, the company takes capital from investors for a fixed period and returns the amount along with interest to the customers.

Better interest than bank FD

Generally, better interest is offered in corporate FD than in bank FD so that people can be attracted. Like the bank, the interest rate can be different for different periods. Just as senior citizens are given additional interest on FD in the bank, similarly, senior citizens are also given additional interest in all corporate FDs as compared to normal FDs. Generally, the period of corporate FD is from 1 to 5 years. By investing in a bank, you will get 5 to 7 or 7.5% interest, but by investing in corporate FD, you can get a return of 8 to 10%.

Know the risks of corporate FD as well.

Along with the high interest rate, some risks are also associated with corporate FD, which you should know. Generally, bank FD is considered a safe investment option because the strict rules of the Reserve Bank are followed. But corporate FD has a little more risk than bank FD. If the bank collapses, the deposited amount gets insurance benefits under DICGC, but there is no such insurance on corporate FD.

If the company collapses, your money can also be lost. However, if you invest in companies with good ratings, the risk can be reduced significantly. Before investing in corporate FD, check the 10-20-year record of that company. If you can take risks, then corporate FD can prove to be a better option for investment.

Disclaimer: This content has been sourced and edited from ZEE Business Hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.