Company deposits for passive income

[niche]

Instead of taking loans from banks, many companies are taking deposits from the public, and paying them interest for the money deposited. The deposit may be cumulative or the interest in paid periodically after a specific period, ranging from one month to annually. The interest rate for the company deposit is often far higher than the bank deposit. It is a good source of passive income for the investor, since he or she will get the interest without any additional effort after making the deposit. However, it is difficult to find reliable companies for making the company deposits. Do investors in your country, invest money in company deposits for a passive income?

 

[Jasmine]

The correct term for this is corporate bonds and it works similar to government bonds, security deposits or treasury bills. When a company wants to raise funds, they offer corporate bonds. These corporate bonds offer certain interest rate for the buyers and the minimum term for these bonds are at least one year. People can buy these corporate bonds, and earn interest on their investment (the bonds that buy). This works just like fixed deposit bank account. You deposit certain amount of money for a fixed term and receive higher interest rate. You can also use your corporate bond as collateral if you want to get a loan from the banks. However, there is also a risk of buying corporate bonds because the company might not be able to payback because of its bankruptcy. If you are interested in buying bonds, you should choose government bonds instead as government is less likely to cheat on you.

 

[niche]

In some countries they may be called corporate bonds, but in other countries they are called company fixed deposits. Can you share how you purchase the corporate bonds in your country, do the companies have agents selling these corporate bonds, or do you have to approach the company office directly to deposit the money?