Last Updated:November 07, 2024, 16:00 IST

Check alternative investment options to help retail investors earn comfortable returns even when stock markets are volatile.

When the stock markets tumble, it can leave retail investors feeling anxious and uncertain about their portfolios. However, market downturns are also an opportunity to reassess and realign financial strategies. Here are alternative investment options to help retail investors earn comfortable returns even when stock markets are volatile.

1. Fixed Deposits (FDs) for Safety

Why Consider? Fixed deposits offer guaranteed returns and are unaffected by stock market fluctuations, making them ideal during market downturns.

Current Scenario: With rising interest rates in India, banks and financial institutions are offering better FD rates, sometimes reaching up to 8% per annum.

Ideal for: Conservative investors or those nearing retirement who prioritise capital preservation.

2. Debt Mutual Funds for Steady Returns

Why Consider? Debt mutual funds invest in bonds, government securities, and corporate debt, providing a balance of safety and returns.

Risk Profile: While not completely risk-free, debt funds generally experience lower volatility than equities.

Options: Liquid funds and short-term bond funds are recommended for investors looking for returns without long-term lock-in periods. Yields typically range from 5% to 7%, depending on market conditions.

3. Government-backed Small Savings Schemes

Why Consider? Schemes like the Public Provident Fund (PPF) and National Savings Certificates (NSC) offer attractive, tax-free returns.

Returns: PPF, for instance, offers an interest rate of around 7.1%, with a 15-year lock-in period but tax-free maturity benefits.

Other Options: Consider the Senior Citizens Savings Scheme (SCSS) if you’re a senior, with returns of up to 8%.

4. Real Estate Investment Opportunities

Why Consider? Property prices in some regions have stabilised, creating favorable conditions for long-term investments in real estate. Rental yields provide a steady income stream.

Alternative Option: Real Estate Investment Trusts (REITs) offer a more liquid, lower-investment entry into real estate, with yields averaging around 6%-8%.

5. Gold Investments as a Hedge Against Market Volatility

Why Consider? Gold has historically been a safe haven during economic downturns and a hedge against inflation.

Options: Gold ETFs and sovereign gold bonds (SGBs) allow you to invest in gold without physically holding it, while offering returns linked to gold prices.

Returns Potential: Gold has averaged 8%-10% returns over the past decade, though actual performance varies with market conditions.

6. Dividend Stocks for Income Stability

Why Consider? Dividend-paying stocks are less volatile than growth stocks and provide income even during bear markets.

Selection Tip: Look for large-cap companies with a history of consistent dividends. Sectors like utilities, consumer goods, and pharmaceuticals tend to have reliable dividend payers.

7. Systematic Investment Plans (SIPs) in Mutual Funds

Why Consider? SIPs in equity mutual funds allow you to invest a fixed amount regularly, spreading out risk and taking advantage of market dips to acquire units at lower prices.

Market Volatility Advantage: With SIPs, investors benefit from rupee cost averaging, which mitigates the impact of market fluctuations.

8. Corporate Bonds for Fixed Income

Why Consider? Corporate bonds, particularly AAA-rated ones, offer fixed interest rates and are relatively safe, especially when issued by financially sound companies.

Current Yields: Corporate bonds can yield anywhere from 7% to 9%, depending on the issuer and bond duration.

Risk Profile: Check the bond ratings to ensure the issuer’s creditworthiness and be mindful of lock-in periods.

9. Hybrid Mutual Funds for a Balanced Approach

Why Consider? Hybrid funds allocate assets to both equity and debt, providing growth potential along with capital protection.

Ideal Choice: Balanced Advantage Funds (BAFs) adjust their equity and debt allocations based on market conditions, which can be advantageous during uncertain times.

10. Alternative Investments: Peer-to-Peer Lending

Why Consider? Peer-to-peer (P2P) lending platforms connect lenders with borrowers, offering a potential for high returns with calculated risk.

Potential Returns: Returns in P2P lending can range from 10% to 15%, but investors should conduct thorough research before committing.

While the stock market may be experiencing turbulence, retail investors have various options to diversify and earn comfortable returns. A balanced approach, combining safe-haven investments like FDs or government-backed schemes with moderate-risk options like debt funds and corporate bonds, can safeguard your portfolio.

Disclaimer: Users are advised to check with certified experts before taking any investment decisions.

Donald Trump’s projected victory at the polls is giving a fresh boost to stocks.

Dow futures soared nearly 1,400 points, or 3.2%, lifting the blue-chip market into record terrain before the start of trade on Wednesday. S&P 500 futures were up more than 2%, while the tech-heavy Nasdaq Composite also looked set to open strong. 

“U.S. equity futures have traded up while election results have been tallied. In our base case, we expect the S&P 500 to rise to 6,600 by the end of 2025, a near-15% price return from current levels, driven by our expectations of benign U.S. growth, lower interest rates and the continued structural tailwind from AI,” Solita Marcelli, Chief Investment Officer Americas, UBS Global Wealth Management, said in an email. “Lower corporate taxes and/or deregulation of the energy and financial sectors under a Trump administration could provide additional support.”

Cryptocurrency is also surging as investors bet that the second Trump administration will benefit the volatile sector. Bitcoin prices rose nearly 8% to a record $75,345.00 in early trading, before dipping to about $73,500. 

The former president, who was once critical of digital currencies, pledged during his campaign against Vice President Kamala Harris to make the U.S. the “crypto capital of the planet” and to create a bitcoin “strategic reserve.”

“Bitcoin is the one asset that was always going to soar if Trump returned to the White House,” said Russ Mould, investment director at AJ Bell, a British online investment platform. 

“Trump has already declared his love of the digital currency and crypto traders now have a new narrative by which to get even more excited about where the price could go,” he added.

The Republican Party’s electoral success on Tuesday, which included winning control of the Senate, is also benefiting Trump’s personal finances by boosting the stock price of Trump Media & Technology Group. Shares in the company, which owns the social network Truth Social and in which Trump owns a stake valued at more than $5 billion, jumped nearly 38% to $46.80 before markets opened. 

Although markets have pushed to new highs this year, Wall Street analysts warn that some of Trump’s key policy proposals could rekindle U.S. inflation, dampen economic growth and drive up the nation’s debt. Specifically, Trump has proposed imposing tariffs of up to 20% on foreign goods and up to 60% on Chinese imports. 

The Federal Reserve will offer its latest readout on the state of the economy on Thursday, with Wall Street analysts expecting the central bank to lower its benchmark interest rate by a quarter of a percentage point. The Fed in September dropped borrowing costs by 0.50 percentage points, its first cut since 2020.

contributed to this report.

Mumbai: Foreign portfolio investors (FPIs) sold equity worth Rs 58,710 crore (till October 11), but massive selling didn’t have a serious impact on the market, market experts said on Saturday. 

According to them, the entire FPI selling has been absorbed by the domestic institutional investors (DIIs) who are receiving sustained fund inflows. The major trend in foreign portfolio flows in October, so far, has been the sustained selling by FPIs. This trend of FII selling and DII buying is likely to be sustained in the near term, the analysts added.

FPIs have been investing in Chinese stocks which are cheap even now. However, “India has much better growth prospects now compared to China and, therefore, India deserves premium valuations”, said market watchers.

Sector-wise, it was a mixed bag for the Indian stock market, with buying seeing in pharma, metals and IT. Result season started with IT major TCS announcing in-line numbers.

Now all eyes will be on Infosys results next week and management commentary on revenue growth guidance. Other prominent companies that will announce their earnings include HDFC Life, Axis Bank, Wipro and LTIMindtree.

“Thus, heavyweights are likely to be in focus. After the sharp fall last week, Nifty consolidated and traded sideways amid relentless selling by FIIs and the absence of any major triggers. Overall we expect markets to consolidate at higher zones and take cues from global factors and result season,” said Siddhartha Khemka, Head-Research, Wealth Management, Motilal Oswal Financial Services.

On another note, India mourned the loss of business icon Ratan Tata, who passed away at the age of 86.

During his tenure, the Tata Group saw an extraordinary transformation, with profits surging 51 times and market capitalisation growing 33 times to over Rs 33,17,385 crore.

Conflicts in the Middle East have intensified, with Israel now engaged in a multi-front war involving Palestine, Lebanon, Yemen, and more recently, Iran. This escalation comes amidst the ongoing Russia-Ukraine war, which began in early 2022. These crises have led to growing concerns that the situation may evolve into a broader global conflict, potentially even another World War.

Veteran investor Shankar Sharma stirred discussions on geopolitical tensions with a tweet, predicting an inevitable escalated global conflict. He foresees the formation of two opposing blocs in the world, with the US, UK, Israel, and Europe on one side and Iran, Russia, China, and North Korea on the other.

“Apna prediction kilear hai: aaj nahi to Kal, ek World War hona hi hai. US UK Israel Europe: Side 1. Iran Russia China N Korea: Side 2. India? Referee without Penalty Powers,” Sharma said in a post on X (formerly Twitter) on October 2.

The tweet hinted at India’s uncertain role, likening it to a “referee without penalty powers” – a position of neutrality but with limited influence in mitigating the global conflict.

Sharma’s prediction aligns with growing concerns about escalating global tensions, particularly surrounding the US-China relations, the Russia-Ukraine war, and Middle Eastern conflicts involving Iran and Israel. The inclusion of major nuclear powers such as Russia, China, and the US intensifies the potential consequences of such a scenario.

Middle East tensions escalated significantly on October 1, when Iran launched around 200 ballistic missiles at Israel. In response, Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Tehran, while Iranian officials warned that any further targeting of their country would provoke an even more devastating counterstrike.

Sharma’s comment on India’s role as a “referee” reflects its current foreign policy of strategic autonomy and its ‘neutral’ position. While India maintains strong ties with the West, it has also sought to balance its relations with Russia and other non-aligned nations.

This is evident in its approach during the ongoing Russia-Ukraine war, where India has preserved diplomatic ties with both Russia and Ukraine. Prime Minister Narendra Modi has engaged with both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy, aiming to foster dialogue without explicitly taking sides.

Financial markets have been rattled by the ongoing geopolitical conflicts, with the Indian stock market indices, Sensex and Nifty 50, dropping over 2% each on Thursday. The heightened volatility in the markets have added to broader concerns about the global economic outlook amid speculations over how the conflict will evolve.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.