Nifty’s Low Return: 4 Safe-Haven Investment Schemes in India to Protect Your Capital from Market Volatility

With recent instances of market volatility and even subdued performance of benchmarks like the Nifty, a large number of investors have reconsidered their portfolios. Though stocks play an important role in building wealth over a long period, not all investors may be prepared to see their portfolios suffer from huge variations in value at difficult times.

Here comes the need for safe investment plans in India, which do not offer sky-high returns, but can help retain one’s money, earn some steady income and lower portfolio risks during difficult times in the markets.

Government-backed plans will still find takers among conservative investors and retirees, who prefer to diversify from stocks.

Public Provident Fund (PPF): The Long-Term Wealth Protector

The Public Provident Fund is considered to be one of the most reliable investment vehicles in India.

Being a Government of India scheme, the Public Provident Fund guarantees fixed returns, tax exemption, and security from market volatility. The interest earned on PPF does not depend on stock market movements and the performance of the economy.

The primary benefit of Public Provident Fund is that it combines safety and tax efficiency. Public Provident Fund contributions are eligible for tax deduction under Section 80C, whereas income on the account and matured amount are exempted from tax. Presently, the interest rate on PPF is 7.1% per annum.

National Savings Certificate (NSC): Stability with Fixed Returns

The other type of government-guaranteed investment vehicle is the National Savings Certificate (NSC).

Whereas equity gives an uncertain return over a certain period, NSC gives certain returns over a defined tenure. This makes NSC suitable for risk-averse individuals.

Additionally, the NSC qualifies as one of the investments eligible for Section 80C deductions; hence, it can be used by the salaried class who prefer fixed income and safety investments.

During times when returns from stock markets become uncertain, NSC becomes a stabilizing factor in the portfolio. Small savings schemes from the government such as NSC are some of the safest investments.

RBI Floating Rate Savings Bonds: A Rising Favourite Among Conservative Investors

There is one investment choice that is gaining increasing popularity and is the RBI Floating Rate Savings Bond.

As opposed to conventional fixed deposits, the interest rate in such bonds will keep changing depending on the interest rate prevalent in the market environment. 

The existing coupon rate will be around 8.05%, which is pegged to the National Savings Certificate rate, along with a spread. 

The bonds have the Government of India guarantee, which makes them one of the most secure investments out there.

Many have noticed that RBI Floating Rate Bonds have emerged as a popular choice of safe-haven asset in the face of uncertain times. 

The investor worried about the dropping FD interest rate can take refuge in RBI Floating Rate Bonds.

Senior Citizens Savings Scheme (SCSS): High Safety with Regular Income

The Senior Citizens’ Savings Scheme (SCSS) still ranks high amongst the best government-sponsored investments for the retired and senior generation.

The scheme pays out interest quarterly and hence makes it ideal for those who need regular money flow post-retirement.

The prevailing interest rate on the SCSS is 8.2%, which ranks among the highest in government-sponsored savings schemes.

As the SCSS is guaranteed by the Government of India, there are no risks for the investor to take and hence earns him/her regular returns.

In times when stock markets turn volatile, SCSS becomes a popular choice amongst retired people.

Why Investors Are Looking Beyond Equities

It is beyond doubt that stocks have always outperformed most forms of debt securities over time periods.

But market correction, global instability, geopolitics, and changing interest rate cycles can generate periods of volatility.

In such situations, investors strive to strike a fine balance between growth and protection.

Safe investment methods in India contribute to that aim by helping minimize dependency on market trends and making sure that a part of the investment portfolio is always protected against fluctuations.

This is not meant to totally take the place of equities but to devise an investment strategy that will survive any condition of the economy.

Should You Move All Your Money Into Safe-Haven Investments?

No. Financial advisors usually advise that one should invest according to his or her goals, risk tolerance, and time frame.

Young investors with long-term investment objectives would still benefit by including some equity investments in their portfolios. Nevertheless, the inclusion of safe-haven securities might make their portfolios more stable and less stressful when markets fluctuate.

Retiring investors, those who have short-term investment objectives, and those who want to preserve capital may include more government-related securities in their portfolios. It all depends on diversification.

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Conclusion

Market volatility is an indication that successful investments are not just about making profits but also about safeguarding money in times of uncertainty.

Investment schemes like PPF, NSC, Floating Rate Savings Bonds of RBI, and SCSS ensure safety, regular returns, and government guarantee, which is something that most investors prefer to invest in during tough times.

Though these investments lack the thrill that comes from the success of the stock markets, it is important that these investments have their place in one’s portfolio in ensuring that money is safe.

In times where the returns from Nifty are uncertain, it is perhaps better to focus on safer government-guaranteed investments rather than taking unnecessary risks.