Corporate fixed deposits have risen as the latest dominating stars in the market, as other frontline shares and second-line shares continue to shake inconsistently in their fight for the spotlight. As investments in equities plummeted down due to the global economic meltdown, people were looking for other modes of investment that had performed relatively well despite the twists and turns of the market. Investors have been disappointed with the relatively poor performance of the economy in recent times, and their performance has solely been characterized by inconsistencies and unsustainable returns. In such a scenario, investors have found a safe haven in the world of corporate fixed deposits, and they are finding quite a lot of takers amongst a lot of investors in the country, especially among the group of retail investors. Financial observers and analysts have been lauding the performance of these corporate fixed deposits, and many of them are even advising their clients that investments in them is the best way to make profits in today’s market scenario. Corporate fixed deposits are definitely the best option for people who need assured and consistent returns, but lack the desire to associate themselves with more risk. After the deplorable performance of equities in the market, people are seeking to move away from their world, looking for other viable risk-free investments.
Corporate fixed deposits are quite a smart investment opportunity and they are initiated by top performing companies who borrow funds from the public for expansion purposes or other related reasons. In order to attract a large influx of customers, companies are offering lucrative rates of interest, which can sometimes even be in double digits. These rates of interest, in comparison to that offered by the fixed deposits of public sector banks, are quite high. One of the major reasons why there was a credit off take in the system can may be attributed to the fact that banks exercise a lot of choosiness when offering their loans like personal loans, home loans etc to their customers. Although there has been a fall in the basis points of corporate fixed deposits, their interest rates continue to be exceedingly high as compared to the interest rates offered by banks. Investors need to remember that with high returns, one must associate higher risk, especially since they are unsecured instruments. In short, in your run for high returns, you are also running behind higher risk. In spite of this risk, if you want to invest in corporate fixed deposits, then remember that diversification is the key to profitability. Remember to never put all your eggs in one basket.
With the credit situation showing some betterment, lenders are trying to acquire higher rates from companies, especially since they appear far more vulnerable in the face of the economy reducing to a fall again. Most of these investments normally offer tenures to investors that are quite flexible, ranging from a period of one year to two years, and more. The longer you invest in these corporate fixed deposits, the higher will be the rate of interest earned by you. Although you may be tempted to earn higher returns with these corporate fixed deposits, the risk involved in these deposits is far much more than that offered by bank deposits. These deposits mostly target investors who are normally retired people, pensioners and other conventional savers. Before you invest your funds in such companies, check the fundamental information and credit rating of the company. Also, decide your risk appetite in the beginning before making an investment. Invest only a small portion of your funds in such schemes as a part of your diversified portfolio.