This AAA Fixed Deposit Fetches An Interest Rate Of 7.75%, Should You Invest?

The fixed deposits of Shriram Transport Finance is offering an interest rate of as high as 7.75% on its deposits. The deposits have been rated AAA by Crisil, which means the highest level of safety on these deposits. Let's take a look at whether it is worth investing in the deposits.

Interest rate on fixed deposits of Shriram Transport Finance

Tenure	Quarterly	Half yearly	Yearly
12-months	6.35%	6.40%	6.50%
36-months	7.30%	7.37%	7.50%
48-months	7.39%	7.46%	7.60%
60-months	7.53%	7.60%	7.75%

Apart from the above mentioned rates senior citizens are entitled to an extra 0.25%, which takes the returns to almost 8% per annum. The company also has a cumulative fixed deposit option that it is offering.

Should you invest in the Shriram Transport Finance Fixed deposits?

Well, to begin with we wish to inform readers that fixed deposits are not secure deposits. We all know the battles and struggles the fixed deposit holders of DHFL faced or are presently facing to get their money back. Having said that we do not want to draw a comparison with Shriram Transport Finance, given that it is a completely different entity. All we are striving to tell our readers that company fixed deposits are not very secure deposits.

The problem for individuals especially those who are retired is that interest rates have fallen very low and that 1 to 2 per cent extra can also make a difference.

What we suggest to investors?

We want to tell readers that it is better to put small amounts and not large lumpsum amounts. Also, do not go for a very long tenure, given that interest rates globally are headed higher. This means that one can look for a 1 to 2 year deposits though on these tenures the interest rates are much lower.

One can also look for the Tamil Nadu Power Finance Corporation Fixed Deposits, where the interest rate is as high as 8%. The deposits are also safe as the company is a Government of Tamil Nadu owned entity.

There are many small finance banks, which might also give you around the 7% interest rate mark. Small finance banks are regulated by the RBI and the deposits are also insured. Hence, there is a greater element of safety that comes-by.

Interest rates in the next few quarters are unlikely to increase and hence investors will have to make do with what is given. However, in the more longer term of around 1 to 2 years, we expect interest rates to trend higher. This is largely because inflation will trend higher and with it the Reserve Bank of India would be forced to hike interest rates at well. It is therefore advisable to invest in fixed deposits for the shorter time period.

Disclaimer:

Investing in company fixed deposits poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.