Taxable bonds

Government of India 8% Savings (Taxable) Bonds, 2003.
The salient features of the Bond areas follows:
Eligibility for Investment

Benefits of investing in Company Fixed Deposits :

  • High Interest.
  • Short-term Deposits.
  • Lock-in period is only 6 Months.
  • No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one financial year.
  • Investment can be spread in more than one company, so that interest from one company does not exceed Rs. 5,000.

Companies where you should not invest

How to choose a company for investing in FDs

Like most investment option, Company Fixed Deposits are a mixed bag. Company FDs can be an interesting investment option if you know how to select the right FD, and how to avoid the no-so-good ones. Here are some of the points that investors should keep in mind.

Spread your Risk

The deposits should be spread over a large number of companies engaged in different industries. This way, you’ll be able to diversify your risk among various industries/companies. Try not to put more than 10% of your total investments in one particular company.

Choose the right period of Deposit

Ideally, the investment should be for 1 to 3 years depending upon the rate of interest.

Periodic Review

The performance of the companies should be reviewed at maturity. This will help you decide whether to renew or reshuffle the deposit. It is also wise to keep a track of these companies by checking their share prices, annual reports and other details reported in newspapers.