One of the biggest fears of every investor in the share market is volatility. They often take bad investment decisions when the stock market is choppy, leading to heavy losses. There is absolutely no doubt that the investment in the Indian stock market is a good option for a long term perspective. However, if any investor wants to avoid the volatility of the Indian stock market, he can invest in various other investment avenues. There are many investment options other than equities that are available in the market. In this article, we are listing out 5 investment options other than equities which can help you overcome share market volatility.
National Savings Certificate
Those investors who want to diversify their investment portfolio can invest in National Savings Certificate (NSC). NSC has a lock-in period of 5 years and is considered a good investment option for conservative investors who want consistency in returns. Those investors who are looking for a tax deduction for saving tax, it is advisable to invest in National Savings Scheme where they get tax deduction under section 80 C of up to Rs. 1.5 lakh.
Monthly Income Funds
Monthly income funds are those investment avenues that invest 16% to 30% of the total investment into equities and remaining in debt securities. It is an ideal investment option for those who want a steady income. If the investment period is less, it is advisable to invest in less risky investment products of monthly income funds.
As they say, ‘don’t put all your eggs in one basket’, same goes with your investments. It is always a good idea to make a portfolio which is diversified. Balanced funds are such funds that provide a perfect combination of equity and debt. If you are looking for long term asset allocation, balanced funds are ideal for you. If your goal is making long term wealth, you must ignore the current stock market volatility and invest systematically in the balanced funds. This investment will test your patience on various occasions. But not falling in the volatility of the market is the key. Reviewing the investment in balanced funds every year is one of the best strategies to beat such volatility.
Fixed Income Bonds
Investors who want returns up to 10% in one year with lesser risk can invest in fixed income bonds such as NCDs and corporate bonds. Often fixed-income bonds generate more return than equities if the period of investment is 1 to 3 years.
Tax Savings Instruments
If you are looking to save on tax, Tax Saving Instruments like PPF are good investment option. Such products are popular because they are EEE (exempt-exempt-exempt) in nature and products like PPF are backed by the government. For availing the tax deduction under section 80 C of up to Rs. 1.50 lakhs, PPF can be coupled with ELSS as an asset allocation strategy. Furthermore, the recent 8% rate declared on PPF makes it attractive along with the EEE status.
Indian stock market provides ample opportunities for long term investment. However, it is equally important to diversify your investments to safeguard against the volatility. The above investment options will help in protecting the capital and generating wealth over a period of time.