Turnaround companies are perhaps the best investments as the safety factor associated with the company is increasing, but it is still offering a risk premium associated with a lower rated company. With some smart investing, one can identify companies that offer a higher rate of return but the risk of the company defaulting is limited. The table here is a list of some randomly selected companies offering a range of risk-adjusted returns. As the table shows, the risk associated with lower rated companies is definitely higher than the FAAA rated HDFC Ltd. as shown by their respective returns offered. Pretty high probability of that happening, you would say.
Interest rate increases with the tenure of deposit.
As fixed deposits are illiquid instruments, the higher the lock-in period, the higher the rate of return offered. This is because the risk to the investor increases with time. But, for some companies like HDFC Ltd., where the risk remains limited even in the longer tenure, the higher rate of return of 10 per cent for a 3-year deposit is definitely worthwhile. Companies offering fixed deposits also offer a variety of options on receiving interest. Monthly, quarterly, half-yearly and yearly options exist in most companies.