Investors: ‘Investors could look to lock in money into corporate FDs’

MUMBAI: Investors can start locking their money in long-term fixed deposits with a tenure of three to five years, distributors said. He said that while deposit rates have increased by 50-75 basis points in the last nine months, the pace of rate hike may slow down in the coming months.

In the last fortnight, three companies HDFC,

and increased rates by 5-50 basis points. One basis point is equal to 0.01%.

After this rate increase, investors can earn from one to 8.25%

deposits, 7.05% off HDFC deposits and 7.25% off PNB Housing Finance deposits. This is the fourth time that industry leader HDFC has hiked rates since May 2022.

Following the recent rate hike, distributors said there is scope for some more rate hikes on deposits, but such hikes would be relatively modest.

Anoop Bhaiya, CEO, Money Honey Financial Services, said, “There has been a steep hike in rates. Investors can lock in long-term deposits with a tenure of 3-5 years.”

Distributors said investors can earn 8-150 basis points more on their corporate deposits than on bank deposits. For example, a deposit of 3-5 years

6.1%, while a 44-month deposit with 7.5% payout, and a 33-month deposit with HDFC pays 6.9%. Financial planners said it is important that investors seek the safety of capital and not chase high returns in fixed deposits. Investors can diversify their deposits into four or five companies for less risk. Bhaiya recommends Bajaj Finance, ICICI Home Finance and Shriram Transport Finance, which are triple-A rated.

Many senior citizens and retail investors prefer corporate deposits over debt mutual funds for their simplicity and visibility of returns.

Abhay Mathure, a distributor based in Mumbai, said, “For those whose income is not subject to tax or are in marginal tax bracket, fixed deposits are a good bet. It is important to stick with companies with high ratings.”

While company deposits returned investors with 6-7% certainty last year, many debt mutual funds gave as low as 2-3%.

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https://economictimes.indiatimes.com/markets/bonds/investors-could-look-to-lock-in-money-into-corporate-fds/articleshow/93718494.cms

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