In cumulative fixed deposit, interest is compounded every quarter or year and paid at the time of maturity.
In a non-cumulative FD, interest is paid out monthly, quarterly, half-yearly, or annually, as per the investor’s choice.
Suitability:Cumulative FDs help you build a corpus by saving a large amount.Non-cumulative FDs help you earn regular interest payouts for meeting your daily expenses.
Cumulative FDs work best for individuals seeking to save and grow their savings.Non-cumulative FDs work best for pensioners who seek a regular income from their savings.

Differentiation between Cumulative and Non-Cumulative Debentures:

Cumulative Debentures:
Cumulative debentures refer to a type of debenture in which the interest payments that are due to the debenture holders, but not paid, accumulate and are paid in the future. Here are some key points to understand about cumulative debentures:

1. Definition: Cumulative debentures are a form of debt instrument issued by companies to raise long-term funds from the public. They carry a fixed rate of interest and have a specified maturity date.

2. Interest Payments: In cumulative debentures, the interest payments are not paid to the debenture holders on a regular basis. Instead, they are accumulated and paid at a later date, usually at the time of redemption or maturity of the debentures.

3. Accumulation: The unpaid interest on cumulative debentures is added to the principal amount, and interest is calculated on the new accumulated value. This accumulated interest is then paid to the debenture holders when the debentures are redeemed.

4. Preference: Cumulative debentures are preferred by conservative investors who are more concerned with the safety of their investment rather than regular interest income. These debentures provide a sense of security as the accumulated interest is guaranteed to be paid at the time of redemption.

5. Higher Risk: From the company's perspective, cumulative debentures carry a higher risk as the interest payments accumulate and need to be paid in the future. If the company faces financial difficulties or liquidity issues, it may struggle to meet its obligations towards cumulative debenture holders.

Non-Cumulative Debentures:
Non-cumulative debentures, on the other hand, are a type of debenture where the interest payments are not accumulated if they are not paid on time. Here are the key differentiating factors of non-cumulative debentures:

1. Definition: Non-cumulative debentures are also a form of debt instrument issued by companies to raise funds. They carry a fixed rate of interest and have a specified maturity date, similar to cumulative debentures.

2. Interest Payments: In non-cumulative debentures, the interest payments are made to the debenture holders on a regular basis, usually at fixed intervals such as quarterly, semi-annually, or annually. If the company fails to make an interest payment, the debenture holders do not have the right to claim the unpaid interest in the future.

3. Preference: Non-cumulative debentures are preferred by investors who rely on a regular income stream from their investments. These debentures provide a steady flow of interest income as the interest payments are made at regular intervals, regardless of the financial position of the company.

4. Lower Risk: From the company's perspective, non-cumulative debentures carry a lower risk as the interest payments do not accumulate and need to be paid in the future. Even if the company faces financial difficulties or liquidity issues, it is not obligated to make up for the missed interest payments in the future.

In conclusion, the key difference between cumulative and non-cum