Should you invest in Corporate Fixed Deposits? Are they safe?

Do you think corporate fixed deposits are as safe as bank Fixed Deposits? Has come agent convinced you that you will get 2-3% higher returns from corporate fixed deposits without any risk?

If that’s the case, you need to be educated a little more about corporate fixed deposits. I will talk about 5 major things every investor should know before they put their hard-earned money in corporate fixed deposits.

What are Corporate Fixed Deposits?

Corporate Fixed Deposits are deposits that are issued by private and public companies, which work very much like bank fixed deposits. There is an interest rate offered and there is a maturity duration for the company deposit. You can either opt for a cumulative option (where your interest is added in deposits) or you can opt for a non-cumulative option, where you are paid the interest after every fixed duration.

A lot of agents get a good commission for selling these corporate fixed deposits to their clients. Nothing bad in that as such, but you need to be clear about some important and critical points related to company fixed deposits.

Let’s start…

Higher the return, higher the chances of Default

In almost all cases, the corporate fixed deposits offer quite higher returns compared to a bank deposit. If bank deposits rates are 7 %, you will see that company deposits floating in markets are providing your returns in the range of 8-14%.

Always ask the basic question – “Why is a company providing higher returns?” 

The logic is very simple, a company needs money for expansion or for some project and to fund that project, they can either take a loan from a bank or raise money from other measures and for that they will have to pay very high interest.

So they float corporate fixed deposits where normal investors like you and me can invest in their deposits and earn higher returns.

But, because you get higher returns, there is also high risk involved in corporate deposits. You never know how the company will do in the next few months or years. You never know how the project of a company turns out and if it’s going to make a profit or loss.

In short, after a few years, when its time for maturity – what will happen if the company’s financial health is not good? Will they repay the money on time? Will they repay the money at all?

In one of the recent examples, a lot of investors had put their money in DSK group fixed deposits

Corporate Fixed Deposits Fraud

A lot of senior citizens are lured into parking their hard-earned money into many shady fixed deposits offered by small or medium-sized company fixed deposits by showing them high returns.

Below is a heart breaking case study of a 78 yr old person who had put all his gratuity and PF money into DSK Kulkarni FD (a very big real estate group in Maharashtra). When his FD maturity came, he was told that he should renew it for another 6 months as its tough to repay right now. The video below is in Marathi, but you will understand some words and will be able to make out what is being said!

So please understand that when you are investing in corporate fixed deposits, there are good chances that if it’s offering very high returns, there is a lot of risks involved in that. You cant get higher return just like that.

Many big companies also offer corporate fixed deposits, but then the interest offered is quite lower and looks reasonable. However the risk is still there unlike a bank FD.

Every company fixed deposits are rated by agencies like ICRA, Crisil, CARE etc and they give a rating to the FD. These ratings are a measure of the company’s ability to pay the interest as well as principal to its investors. A high rating means no or very low probability of default.

CRISIL rating for corporate FD

Corporate FD’s are not regulated by banking rules

Note that unlike bank fixed deposits, corporate fixed deposits are not regulated directly by RBI regulations. All the deposits under corporate deposits are governed by provisions of 73 to 76A of the Companies Act 2013 (erstwhile section 58-A of The Companies Act 1956).

If the company is not paying you on time, you cant do much in that other than following up with the company. However, Fixed Deposits of Corporates are secured borrowing, so in case of winding up of business, secured borrowings are given preference over equity shareholders in terms of repayment.

Some important points related to Corporate Fixed Deposits

  • TDS is deducted @10% if the yearly interest is more than Rs 5,000
  • Premature closure of company FD is not possible for 3-6 months
  • Pre-closure of company FD is not a straight forward process, it’s cumbersome and involves too many documents

Still, want to invest in Corporate Fixed Deposit?

If you still want to go ahead and invest in a company fixed deposits, please take care of the following points.

  • Make sure that the company is paying regular dividends to its share holders
  • The balance sheet of companies is showing profits at least for 3 yrs in a row
  • Make sure its an at least a 5 yr of company
  • Make sure they are offering realistic returns (2-3% more than a bank FD). Do not fall for those companies which are offering very very high returns
  • Make sure these companies are listed on the stock exchange
  • Make sure that they have got a high rating from CRISIL like (AAA or AA or A at least)

Let us know if you liked the article?

Congrats loyal employees – Gratuity limit raised from 10 lacs to 20 lacs

Do you know anything about gratuity? It is one of the components of your salaried income which you will get at the time of your retirement. A lot of people are not even aware of the term gratuity and tax exemption on this amount.

In this article, I’m going to tell you what is a gratuity, how it is calculated and how much tax exemption you can get on this amount.


Recently limit of gratuity payment has been increased from Rs.10 lac to Rs.20 lac. This hike is a kind of good news for employees who are working in the non-government sector for more than 5 years in the same company.

First of all, let me tell you what is a gratuity.

Meaning of Gratuity

Gratuity is the reward given in the form of money by an employer to his employee for being loyal to the company and completing 5 or more than 5 years of service in the same company.

Various countries have different gratuity limit. In India, this limit was Rs.10 Lac earlier but after implementation of the 7th pay increment of salary this limit has been increased from Rs.10 lac to Rs.20 lac.

Mode of Gratuity payment:

Just like your provident fund gratuity is also paid totally by the employer only. It depends on the employer’s decision that either he will pay you this amount or he may take a group gratuity plan with an insurance company. The employee can also contribute to his gratuity if it is paid through insurance company whereas it is not mandatory.

How gratuity is calculated?

Once you complete 5 years of your service, gratuity will be calculated for 15 days per year of your employment. The total working days considered are 26. It will calculated the number of years of your employment.

While considering years of service if the time period is more than 6 months then it will be considered as 1 year. For example, if your service period is 5 years and 7 months then for gratuity calculation it will be taken as 6 years.

Below are the terms taken into consideration while calculating gratuity:

  1. Last drawn salary including basic pay and dearness allowance.
  2. No. of years of your employment.
  3. Paid for 15 days per year of employment considering working days as 26.

The formula for calculating gratuity is given below.

Gratuity formula

Let’s take an example of gratuity calculation.

Suppose you are working with a company from the last 5 years and 7 months and your salary is Rs.50,000 including DA. Then your Gratuity will be –

= 50000*6*15/26

= Rs.1,73,076.9

At what time gratuity is given?

Gratuity is a kind of superannuation. When a person completes 5 or more years of his service in the same company then he is eligible to get gratuity.

The criteria for gratuity payment is given below.

  • Retirement of employee
  • When an employee resigns the job after completing 5 years.
  • In case of death or permanent disability because of an accident.

The criteria of completing 5 years of employment will be relaxed in case of death or permanent disability caused due to an accident. In this case, the employer will pay gratuity for 15/26 days of every completed year of service.

Companies are supposed to pay Gratuity?

The gratuity act was originally passed in 1972. This act covers all the workers or employee’s in various companies, factories, mines, etc. As per this act, all the companies who have at least 10 employee’s have to pay gratuity.

If a company has 10 employee’s though for a single day in a period of 12 months then the company is eligible for paying gratuity.

Who is eligible to get Gratuity?

There are 3 criteria’s for an employee to become eligible for Gratuity which is as:

  1. The employee should retire after completing 5 years of service in the same company.
  2. Employee must resign after 5 years of service in the same company.
  3. In case the Employee passed away or suffers from any kind of deficiency while he was still working.

Whereas as per the rule under section 4(2), 5 years doesn’t mean 365 days/ year. As per this rule, an employee who satisfies the criteria given below is eligible for Gratuity, the criteria are as –

  • The employee should work 240 days a year – if the company has 6 working days.
  •  The employee should work 190 days a year – if the company has 5 working days

This rule is will not be applicable if the employee dies or becomes disable while he is still working. In that case, the company will provide Gratuity to such employee or the nominee.

Is gratuity Amount Taxable?

In the current situation all the government employee has a tax benefit on their gratuity. There will be no tax on the amount received as gratuity for government employees for state government, central government or a local authority.

For non-government i.e. private sector or public sector employee’s tax exemption is depending upon either the employer company is covered under gratuity act or not.

1. Employer covered under payment of gratuity act:

When a person is working in a private sector and his employer company is covered under gratuity act then he can get tax exemption on his half months salary i.e 15 days salary of every year of his employment.

2. Employer not covered under the payment of gratuity act:

When your employer company is not covered under the gratuity act then you can get tax exemption on any one of the three options given below. Whichever is less will be considered for exemption –

  1. Rs.20,00,000
  2. Actual gratuity received by an employee.
  3. 15 days salary of every year of employment.


Change in taxable income because of hike in gratuity limit:

Hike in gratuity limit is more beneficiary for employee’s working in private or public sectors. In any case, government employees are getting tax exemption on the entire amount of gratuity payment.Let’s see the difference in tax exemption after this hike in the gratuity limit.

I hope you got an idea of calculating gratuity and tax exemption on it. If you have any query let us know by leaving your reply in the comment section.

DigiLocker – A Free and Secure way to store your important documents online

Digilocker is a Digital Locker service provided by the Indian Government for the citizens to reduce the efforts of carrying hard copies of their documents everywhere. It is a part of the digital India campaign.

Many times it is difficult to carry the hard copies of your documents everywhere. And there is also the possibility of misplacing or losing your documents. So to reduce your efforts and keep your documents safer, the government has introduced this new feature where you can save all documents and use them whenever you want.

Now, let’s see how digilocker works.


 Key Components of Digilocker

When you log in to Digilocker account, on the first page you can see some key components which are useful for the user. These key points are as:

  • Dashboard
  • Activities
  • Shared documents
  • Issued documents
  • Uploaded documents
  • Issuer
  • Requester

Features of Digilocker:

Digilocker is available in both website and Digi locker app form. Various features of Digilocker make it more attractive and convenient for the users. Some of the main features are listed below:

  1. 1 GB space.
  2. Part of digital India.
  3. Can store both uploaded and issued documents.
  4. You can then also share this URI link of the documents to others when you need to submit your document anywhere.
  5. Both Aadhaar holder and non Aadhaar holders can open this account.
  6. Easy and more secure to use.

What are issued and uploaded documents?

Issued documents: 

Issued documents are the documents which are shared by the issuer to the Digi locker of the user through push or pull way of sharing documents.

Push way means sharing the documents to the Digi-account of the user by using his Aadhaar number to search his Digilocker account if he has already linked it with his Digi-account.

Pull way is the way of sharing documents through URI link if the user doesn’t have his Aadhaar number linked with his Digi-account.

Uploaded documents: 

Uploaded documents are the scanned copies of the documents which are saved by the user to his Digi-account.

How to use DigiLocker?

To take the benefit of Digilocker account you have to sign up first which is very simple. To start a Digi-account first sign up for Digi locker and create a Digi-locker account. Go through the steps given below to sign up for a new Digilocker registration.

Step 1: Download Digilocker app or visit the government authorized Digi locker link and click on the sign-up button on your right.

Step 2: Enter your mobile number and click on continue. You will get an OTP on your registered mobile number. Once you enter the OTP and click on continue you will be directed to the next page.

Digilocker signUp step1

Step 3: Now enter your username and password and click on sign up.

Digilocker signUp step2

Step 4: Here you will be asked to enter your Aadhaar number. To link your Aadhaar with your Digi-account, your mobile number must be registered with Aadhaar so that you can get OTP. If your mobile number is not registered with Aadhaar, you can skip this step by clicking on the “continue here” button given below.

Digilocker signUp step3

That’s it. Your Digilocker account is ready to use now.

Digilocker account

You can read the user manual for Digilocker here.

Three entities in Digilocker:

Any person having an Aadhaar card can open a Digilocker and save his documents safely in it. There are generally three categories of people considered as the users of Digilocker. These categories are made on the basis of users of this facility.

Three entities in digilocker

1) Citizens/Individual:

The first category includes the person holding the Digi locker account. The person here has all the authorities regarding his Digi locker. Only he can manage the account. And no one can use his Digilocker documents without his permission. On the other hand, this person can use his documents whenever and wherever he wants.

For example: if you go to any government office for some very urgent work and then you realize that you have forgotten to bring one of your document which is very important. what will you do in such a situation?

If you hold a Digilocker account and have saved a copy of that document in that account then you can take print of that document or can simply share the URI link.

2) Issuer:

The issuer can be any Governmental or private institute or company. This issuer provides the e-documents through URI by using persons Aadhaar number. It will help the issuer and the receiver both to provide the document on time and avoid delay.

Besides, there is no need to send the documents physically to each individual on their respective address and track those documents in case that person doesn’t receive it.

3) Requester:

Requesters is the institute or individual who uses your e-documents through Digilocker for the verification or any other legal procedure. When you provide your URI link to the requester then you don’t need to submit any hard copy of that document.

Requester can be universities or any government officials etc.

Benefits of Digilocker:

  1. All the documents shared are paperless so it reduces the efforts of maintaining the paper documents for government officials.
  2. When you save any document to your Digilocker account you can add you e-sign so that it becomes a more authenticated document with self-attestation.
  3. The issuer can directly issue the documents to an individual which makes the document delivery procedure more safe.
  4. User can use the documents saved in Digilocker anywhere, at any time which proves more convenient for the users.
  5. When you use the URI link of the documents directly shared by the issuers, it reduces the possibilities of submitting fake documents.

#Digilocker helpline:

If you have any complain regarding digilocker then you can send your query at [email protected].


7 sites where you can easily learn stock trading without risking your money

Do you want to learn stock trading, but don’t want to lose money in the process? In this article, I’m going to tell you about 7 best virtual trading websites or apps which will help you to learn stock trading without risking your money.

virtual trading

A lot of investors are excited to know about stock markets and how they can make a lot of money. They open a Demat account and start trading based on tips from various third party websites, or using their own judgment. But in the process, they lose a lot of money because of various mistakes.

However now, it’s easy to first practice stock trading. Have you heard about virtual stock practicing apps or websites? Have you ever tried using them?

How Virtual stock trading works?

Let me explain virtual stock in market India for those who are new to this

  1. You open an account on the virtual trading platform or app
  2. Then login to the account and load some virtual money in the account like 1 lacs or 10 lacs to start with
  3. You can then start buying and selling various stocks as you do in real life
  4. Like this, you can make various trades and see your profits and loss over time
  5. Over the next few weeks, you will learn how stock market trading works and you can also see how you have performed
  6. Once you are confident about your abilities, then you can open a real trading account and start stock trading with your real money

Now let’s look at some of the websites which you can use to practice stock trading.

1) Moneybhai

Moneybhai, a virtual stock trading game is a product of money control virtual trading which is popular in India. In this game you will get Rs.1 crore virtual money on your portfolio account and also the limit of Rs.1 crore intraday trading limit, which means that you can only buy and sell worth Rs 1 crore in a day.

You will have the option to invest in stocks, mutual funds, FD, bonds, etc. So here you have lots of options for investing with the imaginary brokerage charge of 0.50% in the virtual trade market. This is a great feature because here you are also paying virtual brokerage charge which you have to pay in real life when you trade with your real money, so that is taken care in this website.

Who should use this one: If you want a lot of options to invest like FD, bonds, mutual funds, stock, etc. then this game is good for you.


You can start trading at any moment once you are logged in. If you feel that you have made any mistake in investing or you went wrong at any point then you can reset your portfolio back to the original corpus of Rs.1 crore and start again. I personally feel that one should not use that option of reset because then you don’t know how you are performing exactly.

2) TrakInvest

TrackInvest as the name suggests itself is an investment guide. It is build up by considering the beginner’s point of view. If you have heard of the stock market but don’t have enough basic knowledge then this website will guide you in your virtual investment.

Who should use this one : If you are an absolute beginner who has no understanding of how the stock market works and you also need tutorials to educate yourself, then you can try this.


The simple interface and helpful content will ease you into the world of trading. It is more easy than it actually looks. It enables learners by giving a better understanding of the market. You can build your portfolio with zero risks and improve your market skills.

It gives the investors access to the real stock market from multiple global exchanges to trade-in. It also builds up your portfolio like an expert and tests your investment strategies and leverage analytics.

3) Dalal street

Dalal street is an investment journal that offers you Rs.1,000,000 as virtual money at the initial stage and provides an experience of real time stock trading with a virtual portfolio.

Who should use this one: One who wants to learn stock trading by using investment journals can get the advantage of this website.

Dalal street

Here you can also discuss your strategies with like-minded participants in a group. This will help you to improve your skills and strategies by other people’s experiences.

4) Wall street survivor

Here you can get the actual experience of stock trading with the virtual money because of the updated data. Wall street survivor doesn’t believe in the concept of teaching through content only. As per their opinion investment is more like fun, challenging and potentially lucrative activity rather than education.

Who should use this one: If you want practical knowledge through tutorials and improve your skills and decision making which will found new strategies then try this site.

Wall street survivor

This website also offers some courses to educate you about stock trading and tests your knowledge about investment and personal finance. They have lots of articles and videos which will keep you engage in various activities by aiming to improve your skills.

5) Investfly

Using investfly is not as hard as making money through your investment. Investfly make it easy for you to make money first virtually and then in the real stock market.

Who should use this one: If you want to trade with advance information and more trading options then you can try this site.


This website provides you a brief summary of how to start investing. This will be of great help for the beginner investor who had never invested in the real stock market. If you are interested in learning about stocks more then this will be a great platform for you.

6) ChartMantra

ChartMantra is a free online virtual stock market trading game cum analytical platform. It is a virtual game for trading. You can learn the basics of the technical analysis in stock trading and apply it to an actual stock exchange to analyze your portfolio.

Who should use this one : This platform is for those who want to learn stock trading and also its analysis.


Here you will get Rs.1 lac virtual money and the objective of this game is to make as much money as you can from it and go the top of the rank. This game will analyze your buying and selling and give you an analysis of it so that you can track your record and apply the analysis on your real trading account.

The trading will cost 0.1% brokerage which will make the trading more realistic.

7) Moneypot

Moneypot is a game of virtual trading in India which provides the platform of virtual stalk trading to students, corporate as well as investors. It aims to connect an online investment community through a social trading platform.

Signing in here just like other virtual trading sites. Once you open the website you can see the sign-up button and play game button. you can click on sign up if you are new to this site and then can play the game.

Who should use this one : This is the best virtual trading site for beginner investors or stock market learners.


Advantages of Virtual trading

The advantages of virtual stock trading are as bellow:

  • For beginners it is good way of practicing because it allows the direct buying and selling the virtual stock.
  • You don’t need to invest real money.
  • As there is no real money you can take higher risk.
  • You get basic understanding and knowledge about the functioning of stock market.
  • You can learn through actual practice rather than only reading.
  • Mistakes don’t cause any loss here.

Disadvantages of Virtual trading

The disadvantages of virtual stock trading are as bellow:

  • As we said you don’t invest actual money, there is a possibility that you may not get emotionally attached with it because you are not losing anything in any case, which does not happen in real life.
  • If you don’t get emotionally attached to it you will get bored after some time and stop playing.
  • Sometime there is a possibility of getting bored because they are not getting any return in actual.
  • If you make profits in virtual trading, people tend to get very over confident about their abilities to make money

Now as you get a lot of options for virtual trade practicing you can start to learn to trade and get the real experience  of stock exchange. Leave your queries in the comment section and let us know your views regarding this article.

ELSS vs PPF – where to invest for your tax saving? (20 yrs data analysis)

Most of the people who want to do tax saving in 80C are confused if they should invest in PPF or ELSS (tax saving mutual funds). Both PPF and ELSS offer taxation benefits of up to Rs 1.5 lacs under sec 80C.

PPF vs ELSS - which one is better to invest?

ELSS vs PPF – Meaning

Let’s start with their meaning and what exactly they are.

PPF means public provident fund. Its a govt scheme which is run by the post office and its a very safe financial product. There is no risk to it because it’s guaranteed by the govt of India. Its quite famous among investors for its safety and assured returns.

On the other hand ELSS (Equity linked saving scheme) is fairly new financial product in India (from last 15 yrs). It’s mainly an equity mutual fund that gives you an income tax benefit. Equity mutual funds mainly invest in stocks of companies, which makes sure that they deliver high returns, but at the same time they are risky (actually volatile) and their returns keep going up and down.

Now, let’s compare PPF and ELSS on various parameters.

#1 – Returns

The returns in PPF change every year and it’s around 7.5-8 %. Right now its 7.8% and it keeps on changing from time to time which is notified by govt. Earlier many years back, PPF returns were in a range of 12% and then it came down to 9%. But from the last few years, it’s hovering around 8%.

In the case of ELSS, it’s linked to the market and the returns are not fixed in the short term. Some years it can be 20 %, some times it can be 50% and in some years it can be -25% also. So you can see that the returns are totally dependent on stock markets and how well they perform. However, in the long term, you can be assured that you will get a return in the range of 12-18%.  The returns are not at all guaranteed by anyone.

#2 – Lock-in Period

Your PPF investments are locked in for 15 yrs, but some partial money can be withdrawn after 7 yrs. So basically its a very long term product, and if you are investing in PPF, you should be ready to lock you money for a very long time. After 15 yrs, you can again extend your PPF for another 5 yrs (any number of times) and your money will again be locked for that 5 yrs.

On the other hand, ELSS has a lock-in for just 3 yrs. You can take out your money after 3 yrs. The important point to note here is that each investment is locked in for 3 yrs, so if you have a SIP running in an ELSS fund, then each installment is locked for 36 months.

So if you want money in 4-5 yrs, ELSS is a better choice compared to PPF from a liquidity point of view.

#3 – RISK

PPF is not at all risky because its value does not go down. PPF is also guaranteed by govt, so there are no changes in fraud. If you plot the graph of your PPF value, you will see a straight line going up. However, note that PPF has a totally different kind of risk, which is that it does not give inflation-adjusted positive returns. This means that its returns match the inflation and in the end, you do not have any net returns.

On the other hand, ELSS is volatile, which is often referred to as “RISK” . The value of ELSSS keeps going up and down depending on the stock market movements. In the short term, you might experience a downturn and loss in value, but over the longer-term, you will see good results.

As most of the investors are risk-averse and do not like to see a dip in the value of their investments, most of the investors stay away from ELSS or stocks in general and lose the chance to experience great returns at the same time.

#4 – Taxation

PPF is tax-free. There is no tax on PPF returns. Whatever returns you get in PPF is 100% tax-exempt.

Earlier ELSS was also tax-exempt after 1 yr, but with budget 2017-2018, now any gains in equity mutual funds or stocks are taxable @10% when you sell them, but you get an exemption of Rs 1 lac per yr. This means that if your profit after selling ELSS is 4 lacs, then you have to pay a 10% tax on 3 lacs. However, even after this taxation, the post-tax returns of ELSS are much better than any other investment option.

Here is an infographic that shows you a quick comparison between PPF and ELSS.

ppf vs elss - where to invest for tax saving under 80C

How to invest in PPF or ELSS?

If you want to invest in the PPF account, you can open a PPF account in a post office or any bank (generally SBI is very famous for PPF). Note that it does not matter where you are opening your PPF account, if you open with the post office, SBI, or ICICI .. at all the places you are going to get the same interest because ultimately it’s controlled by POST OFFICE only.

The banks are just a medium to invest and nothing else.

If you want to invest in ELSS, then you can choose any fund house (there are many AMC like ICICI, HDFC, SBI, Motilal Oswal etc). You can either go to their website directly or contact an advisor (You can also invest in ELSS through Jagoinvestor help)

Returns of ELSS and PPF from the last 20 years

It’s important to check how PPF and ELSS have performed in the last 20 yrs (1996 – 2016) so that you get a fair idea on their performance and which one is better from a long term point of view. So we took one of the famous ELSS (HDFC Tax Saver) as an example along with PPF and calculated how the value in both will increase over time if someone invests Rs 1 lac in both the financial product.

PPF vs ELSS - difference in returns in last 20 years

In the above table, you can see that Rs 1 lac of yearly investment for 20 yrs have accumulated to Rs 54 lacs in PPF, whereas it becomes 2.2 crores in the ELSS, which means that ELSS gave 5 times more returns than PPF.

However, this difference is more visible only after 10 yrs passed and compounding starts kicking in.

In the initial years, there was no big difference in their values. See the graph given below. You will get a clear idea of how ELSS has performed incredibly towards the end of tenure.

elss vs ppf returns in last 20 years

Important Note :

The example of HDFC Tax Saver is taken only for the illustration purpose. This is not a recommendation, and right now HDFC Tax saver is not the best option for tax saving. There are many other ELSS funds which can be chosen other than HDFC Tax saver. Kindly contact your Financial Advisor for any recommendations.

So after studying the table data and graph, I hope it becomes easier for you to know the difference between the returns from PPF and ELSS investments. If you still have any confusion or any doubt in your mind, feel free to ask us by leaving your query in our comment section.