Investing stress-free: 6 low-volatility plays to look at

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When markets become volatile, investors are naturally inclined to seek safer grounds which offer return without compromising on stability. Fixed deposits are no more the only option, and available substitutes like PPF, NSC, debt funds, and recurring deposits offer varied degrees of security, liquidity, and tax relief. Such instruments can be employed by people to contain risk while growing wealth, something especially significant for those looking forward to financial stability in 2025.

Fixed deposits: Regular returns, conventional style

Bank fixed deposits—public as well as private sector—are still giving stable returns, typically between 5% and 6% for one-year terms. Some small finance banks or NBFCs may give a bit higher rate, but FDs are a definite low-risk bet for your portfolio.

National Savings Certificate (NSC): Stable return with moderate downside

The NSC offers a secure 7.7% return and allows investment of a minimum of ₹1,000 (in multiples of ₹100), without any cap. Its five-year lock-in offers protection as well as tax deduction benefit, and hence it is a favourite small savings tool.

Public Provident Fund (PPF): Long-term protection with tax advantage

PPF remains a tried-and-tested choice for conservative investors. Returning about 7.1%, it offers annual contributions ranging from ₹500 to ₹1.5 lakh but comes with 15-year lock-in—the perfect fit for long-term goals like retirement or higher education fund for a child.

Debt mutual funds: Low-volatility income range

For the investor who wants something better than fixed instruments, debt mutual funds—of any type like liquid, overnight, short-duration, and long-duration—offer relatively stable returns. While not entirely immune to rate movement, they tend to fare better than FDs in existing rate regimes.

National Savings Recurring Deposit: Small save, steady earn

Similarly but with greater flexibility, the NSRD allows you to start with just ₹100 with an annual return of about 6.7%. This scheme is best suited for those who enjoy making small regular investments with no lump sum commitment.

Recurring deposits (RDs): A systematic and gradual method

RDs with post offices or banks facilitate regular investment—commonly on a monthly basis. Interest rates typically vary between 6–7%. The disciplined nature of RDs encourages saving tendencies along with low but certain increase.

FAQs

Do such safe investments come with tax benefits?

Yes, schemes like PPF and NSC are deductible under Section 80C of the Income Tax Act. However, the interest earned is tax-deductible in most cases except PPF whose return is tax-exempted.

What is the best option for short-term needs?

For short-term needs, fixed deposits, recurring deposits, or liquid debt funds are appropriate. They provide liquidity and decent returns without blocking money for long durations.

Are debt mutual funds as safe as FDs?

No, debt mutual funds are susceptible to market movement, particularly movement of interest rates. But they are less risky than equity funds and can provide higher returns after tax than FDs in the long term.