Fixed income products forms the base of a financial plan. If the base is not strong whatever we build upon it is under risk of collapse, therefore by allocating a higher quanta of funds towards fixed income products improves the overall stability of a portfolio.
BENEFITS OF FINANCIAL PLANNING:
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
deally, the investment should be for 1 to 3 years depending upon the rate of interest.
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.