In the case of corporate FDs, the emphasis is always on ratings. If you are also investing, do not do too much. Higher credit FDs have lower risk.
Concerns about investing in fixed income instruments have increased as banks have reduced their FD interest rates. At a time when people are keeping their money safe in banks due to economic uncertainties, the lowering of interest rates has been a problem for them. Especially for the elderly, who keep most of their money in bank FD.
Some companies are giving returns of up to ten percent,
meanwhile some companies have announced returns of up to ten percent on FDs. HDFC, Bajaj Finance, LIC Housing Finance and Mahindra & Mahindra have announced interest ranging from 7 to 9.5 per cent. Interest rates of up to ten percent have been announced on FDs for one to two companies. In such a situation, the depositors will be attracted to the FDs of these companies. But is it okay to put money in them by looking at the high interest rate?
Invest on the basis of credit rating
Experts believe that investing in such FD can be risky. Such a deposit scheme with high interest rates can become a threat to investment. Therefore, in the case of corporate FDs, the emphasis is always on ratings. If you are also investing, do not do too much. Higher credit FDs have lower risk. AAA rated scheme means that the risk of default in it is negligible or very low. Risk increases as ratings decrease. Before investing, one must check the track record of the company issuing the pre-closure option, penalty, bond etc.