How to choose a Corporate FD?

Important thing with corporate fixed deposits is to choose the company that you are investing in wisely. Here are some factors to keep in mind when investing in Corporate FDs:

Reputation & Rating: Invest in a company with a good reputation and a good credit rating (given by industry-recognised rating agencies like CRISIL, ICRA).

Diversify: You are investing in more than one corporate FD, invest in different companies operating.n different industries.

Time period: Usually, corporate FDs are invested in for 1-3 years.

Why Invest in Corporate FDs?

They give you higher interest rates than bank FDs even shorter terms than bank FDs, This means your money becomes available to you faster also its easy to apply and nominate for continuity.

Ways to Invest in a Corporate FDs

Like any other fixed deposit (FD), you have to invest a chunk of money at one go in a corporate FD. However, there are two ways in which you can receive the interest on your investment:

Cumulative: In this type of corporate FD, the interest earned is added to the principal so that your earn interest on the interest. Simply put, this means higher returns. This is good if you aren't looking for regular income from your investment.

Non-Cumulative: In this type of corporate FD, the interest earned is paid out to you while further interest is calculated on the original sum you invested. This means you earn an income at regular intervals, but eliminate the possibility of earning interest on interest.

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