What Are Your Investment Options during a Stock Market Crash?

Investing in the stock market can be one of the easiest options. Moreover, with a high number of people around us investing in shares, it definitely seems to be a lucrative investment option. However, the biggest drawback of investing in the stock market is its unpredictability.

During the past few months, the market has been highly volatile, and this may be giving you sleepless nights. If you are thinking of alternative investment options, consider investing in fixed deposit or recurring deposit, which are more credible and provide higher returns too.

Let’s have a look:

Fixed Deposit (FD)

A newbie or a seasoned investor, fixed deposit is always a bankable and safest investment option as it offers flexible tenor, assured returns and high stability. You are assured that the principle amount is safe, and is growing as per the FD interest rates. Fixed deposits are of two types. Cumulative FD, which compounds interest annually, whereas if you invest in non-cumulative FD, the interest payout will be at regular intervals like monthly, quarterly, half-yearly or annually.

You can choose the tenor between 12 months and 60 months and the interest payout according to your financial needs. Apart from attractive interest rates up to 8.75%, FD offers a series of benefits for senior citizens and children along with online account management. Moreover, financial companies like Bajaj Finance provide the service for FD Calculator, which helps you to check the maturity amount at the time of investment.

Public Provident Fund (PPF)

Old and trusted, PPF is one of the most popular long-term investment tools. If you are planning to invest in options other than the stock market, PPF serves as a perfect alternative. It not only offers a higher rate of interest and returns but also is highly credible as the Government of India backs it.

PPF being a long-term investment tool, you can start investing for your child’s future or retirement corpus. An investment of amount as low as Rs.500 is required as a beginner and can go on to 1.5 lakh annually. Investing in PPF offers tax savings under section 80C of Income Tax Act. Hence, the interest earned and the maturity amount, both are exempted from tax.

Recurring Deposit (RD)

Recurring deposit is a term deposit mainly offered by banks and financial companies. The primary benefit of RD is that people with regular monthly income can deposit a fixed amount every month into their RD account. Hence, in a way, those who invest in RD are encouraged to save a part of their monthly income for investment and earn interest at the rate applicable to FD. A minimum period of RD is six months, and maximum is 10 years. As an investor in RD, you can also avail loans against the collateral of RD up to 80 to 90% of the total value of the deposit.

Mutual Funds (MF)

Mutual funds are subject to market risks; however, if you go for a smart long-term investment, they are low risk and highly reliable. Mutual funds provide economies of scale, high diversification and are managed by professional investors. Hence, even if you are new to the world of investment, you have professionals to handle your portfolio, which eases out the hassle to a large extent.

It has a lower transaction cost, which allows you to invest more amount. Mutual funds that do not have specified lock-in period offer liquidity, at any time. However, one of the cons of investing in MF is that you have to pay various fees and expenses.

Choosing the right investment option is a serious decision. Pick the right one for you.

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