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This Government Company Offers 8% On Fixed Deposits, Should You Invest?
The government of Tamil Nadu owned, Tamil Nadu Power Finance and Infrastructure Development Corporation (Tamil Nadu Power Finance) is offering an interest rates of as high as 8% on its fixed deposits for individuals and 8.5% for senior citizens. That is extremely good when compared to government owned banks.
Interest rates offered by Tamil Nadu Power Finance on FDs
| Individuals | Senior citizens | |
|---|---|---|
| 12 months | 7.00% | 7.25% |
| 24-months | 7.25% | 7.50% |
| 36-months | 7.75% | 8.25% |
| 48-months | 7.75% | 8.25% |
| 60-months | 8.00% | 8.50% |
Better interest rates when compared to banks
With State Bank of India FDs offering at best an interest rate of 5.5%, the interest rates being offered by Tamil Nadu Power Finance and Infrastructure Development Corporation is not bad at all. In fact, the interest rate of 8.50% for senior citizens is unmatched at the moment.
What we also found is that the website of the company is very friendly to open online deposits. In fact, we doubt if there would be any broker that would handle the deposits and you may have to do the same online. You can open the Fds online and we found the website interface very good. Investors who are looking for a pretty decent interest rate can invest in the FDs of Tamil Nadu Power Finance.
Look for medium term tenure of fixed deposits
We would suggest when investing in the fixed deposits, do not go for a very long term tenure of more than 3-years. We believe and we can even be wrong, that interest rates could rise in the slightly medium to longer term. So assume that you invest for a period of 5-years and if interest rates were to rise, you would have to pay a penalty in case you want to break the fixed deposit and invest the same again. Therefore, a 2-3 year deposit would be good, in fact you can even look at 1-year deposits.
Safety of the Tamil Nadu Power Finance Fixed Deposits
We believe that since this is a Government of Tamil Nadu Enterprise there should be no risk. In fact, we had earlier invested in the Government of Kerala backed deposits of Kerala Transport Development Finance Corporation (KTDFC) fixed deposits, and we did not face any issue in redemption. However, we are not recommending the deposits of KTDFC, as the interest rates have dropped sharply or else even the KTDFC deposits were safe.
Readers often ask us whether one should wait for interest rates to rise and then invest. We believe that interest rates on fixed deposits are the lowest and to believe that they would go lower from here is a little far fetched. It is highly possible that when economic recovery gathers pace demand for credit would increase and banks would be forced to hike their deposit rates. This is one reason we have been telling investors not to park money over the long term.
To conclude, we believe that the deposits of Tamil Nadu Power Finance and Infrastructure Development Corporation are excellent in terms of interest rates and safety. In fact, even for senior citizens the interest rate being offered of 8.5% is simply superb.
