Investing In Company Fixed Deposits? 8 Things You Need To Check
By SiliconIndia
4. Insurance And Security
The corporate fixed deposit schemes are not covered under any Insurance benefit like the bank FDs. All the bank deposits such as savings, fixed deposits, current and recurring are insured up to Rs 1 lakh. Default is always a matter of concern for company FDs. So it is important to know the risk that all the investors may face.
5. Types Of Schemes
Company FD schemes are of two types -Cumulative and Non-Cumulative schemes. In case of Cumulative Deposit scheme, the interest is paid along with the principal amount on the maturity date. Whereas, the interest amount is paid periodically under non-cumulative schemes.
People like freelancers or retirees, who need regular additional income, can opt for periodic interest payments (monthly/quarterly/half-yearly/yearly). Benefits from fixed deposits with cumulative interest rates are significantly higher as the interest paid is again put back into the account and the depositor can avail the benefit of compounding.
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