Banks have cut their FD interest rates, raising concerns about investing in fixed income instruments. At a time when people are keeping their money safe in banks due to economic uncertainties, falling interest rates are causing them trouble. Especially for the elderly, who keep most of their money in bank FDs.
Some companies are offering Returns up to 10 percent
Meanwhile, some companies have announced returns of up to 10 per cent on FDs. HDFC, Bajaj Finance, LIC Housing Finance and Mahindra & Mahindra have announced interest rates of 7 to 9.5 per cent. An interest rate of up to ten per cent has been announced on FDs for one or two companies. In such a scenario, depositors will be attracted to FDs of these companies. But given the high interest rates, is it okay to put money in it?
Invest based on credit rating
Experts believe that investing in such FDs can be risky. Such a high interest rate deposit scheme can be a risk to the investment. Therefore, in the case of corporate FDs, there is always an emphasis on ratings. If you’re investing too, don’t overdo it. High credit FDs have low risk. AAA rated plan means that the risk of default is negligible or very low. The risk increases as ratings fall. Before investing, the company needs to check the track record of the company issuing the pre-closure option, penalty, bond, etc.