Post Office Fixed Deposits are the traditional investment avenue preferred by many risk-averse investors because they are secured offering assured returns. However, the trouble with them is that you will earn only modest returns and over a long period, your invested money will lose its value due to its incompetency to beat inflation.
Most of the investors choosing the post office FD are long term investors as these FDs are limited to certain maturity periods only and inflexible. But it is not good news for long-term investments as your money goes to lose its value in the long run and you can not neglect the truth that the cost of financial goals go up with time. Do not let your investment avenue create a gap between your funds and the cost of your financial objective.
Company Fixed Deposits, also called corporate fixed deposits, can overcome many shortfalls of post office fixed deposits. The fixed deposits with Non-banking financial companies (NBFCs) are known as company FDs. Let us elaborate on the benefits of company FDs.
1. Higher Rate of Returns
Company FDs are governed by the Companies Act under Section 58A which are not affected by market forces for investments. Generally, these FDs provide you with a 1% to 3% higher interest rate than the PO FDs. Therefore, these FDs are preferred by informed investors. Bajaj Finance FD is offering higher FD interest rates up to 7.25%.
2. Flexible Tenor
Company FDs are available for every kind of investor as they offer flexible tenor from 12-60 months. There are special FD tenors also with some renowned NBFCs like Bajaj Finance that can provide you with higher interest rates than normal tenors.
3. Interest Payout Options
Company FD is a good choice because it offers cumulative interest and non-cumulative options as well. If you are required regular income from your investments, choose a non-cumulative interest payout while opening an FD account. There you will get options to choose from – monthly, quarterly, half-yearly and annually. Choose one option as per your financial needs. On the other hand, if you do not need regular income, simply choose cumulative FDs and you will get accumulated interest at the date of maturity.
4. Tax Saving
Fixed deposit income tax exemption is also an attractive benefit. If the depositor falls in the zero tax bracket, he should submit form 15H at the starting of every financial year in order to avoid TDS. You can avail of Tax Deducted at Source (TDS) deduction if your interest income is less than Rs.5,000 in a financial year.
You can check the credit ratings by national and international credit ratings as these ratings help you make smarter decisions on financial institutions. These credit agencies provide an unbiased and independent opinion on investment safety with an institution. Choose a company FD with FAAA/Stable rating from CRISIL and MAAA Stable Rating from ICRA.
6. Easy Liquidity
Company FDs can be liquidated easily as NBFCs allow premature withdrawals. You can withdraw your FDs after six months of opening your FD account. If you do not want to discontinue your FD before maturity, then you can fulfil your urgent financial needs by getting a loan against your FDs. It is easy as that.
7. Higher Interest Rate for Senior Citizens
Company FDs are quite popular among senior citizens because they get higher interest rates than non-senior citizens.
8. Easy Online FD Account
You can open an online FD account with most NBFCs. You just need to sign up with your basic details and provide your bank details for verification. You can make deposits online without the botheration of queues.
9. Minimum Deposit
One can open Bajaj Finance fixed deposit account with Rs.25,000 only. The minimum deposit amount may vary from institution to institution.
If you compare the National Pension Scheme with the Bajaj Finance fixed deposit, then you can expect the better return from the Bajaj Finance FD scheme. You can compare NPS vs FD online.
Thus, whether you are an investor with a short term goal or a long term goal, you should complement your investment portfolio with company FDs.