Steady money growth, guaranteed returns

Inflation is a money-killer. No matter how much you earn, it always seems to fall short when it comes to your medium to long-term expenses. Because, what you can buy for Rs. 100 today will cost you Rs. 110 in a year, if inflation is at 10%.

Thankfully, we are past the days of extremely high double-digit inflation. These days, you don’t have to worry about beating inflation by investing in high-risk schemes. You can play safe now and opt for the sturdy Fixed deposit investment again. Their rates of return are guaranteed, regardless of interest rate fluctuations. Your investment is locked-in at a specific rate of interest. So, you can forget about getting those worry creases on your face.

But the next obvious question would be: Which is the Best Fixed Deposit Scheme in India?

If you were to invest in banks, then more or less, all of them offer similar rates of interest on fixed deposits based on duration. Even their special rates for Senior Citizens and Women are nearly equal. However, if you research well enough, you discover some banks offering 1% to 2% extra under specific stipulations, which would mean a tidy interest gain (were you to invest a large sum). But those are exceptions. By and large, in banks, you can’t really say there is a contender for the Best Fixed Deposit Scheme in India. Even Post Offices offer Fixed Deposit Investment schemes of a similar nature.

Now let’s make this quest interesting. Have you heard of company fixed deposits (FDs)? These are usually offered by NBFCs (Non-banking Financial Companies). But by definition, housing finance companies, financial institutions, government companies and manufacturing companies also can offer them.

What’s so interesting about these company fixed deposits? They offer you a higher rate of interest than the plain-vanilla FDs of banks and Post Offices. They also offer you a flexible tenure of investment. Their interests are paid out on a monthly/quarterly/half-yearly/yearly basis through cheque or Electronic Clearance Services (ECS). Do not take this interest income out, if you don’t need it. Opt to plough it back into your fixed deposit for higher returns.

There’s higher tax liability, too, though. Unlike banks deducting Tax Deducted at Source (TDS) when interest income crosses Rs. 10,000 in a fiscal, company fixed deposits do that at Rs. 5,000. So, you need to calculate where you are making more money, post taxes.

Before investing in any company fixed deposit, just check:

• Its ratings, given by CRISIL and ICRA. You should be looking at only AA or AAA schemes.
• Background and track record of the company.

A little precaution and proper research will ensure your money lands in the Best Fixed Deposit Scheme in India. Get rich, but carefully.