Post Office Public Provident Fund (PPF), FD, NSC Better Options Amid Share Market Crash? Experts Speak

Post Office Public Provident Fund (PPF), FD, NSC Better Options Amid Share Market Crash? Experts Speak

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SHARE MARKET CRASH today came as a shocker for investors, especially small investors who hope to maximise returns on their hard-earned money by investing in the stock market. However, as the bloodbath on Dalal Street made the Friday freaky amid Coronavirus scare, an important question that came in the minds of scores of small investors was: Is it better to invest in Fixed Deposit and small savings schemes offered by Post Office including Public Provident Fund (PPF), NSC, KVP etc? All these schemes offer 7-8% interest with guaranteed returns. FE Online talked experts to find an answer to this question and also on the current market scenario and how investors can keep their money safe:

Are Fixed Deposit/Post Office deposit schemes better options for investors amid stock market crash?

Rachit Chawla, founder and CEO, Finway: The stock market crash that has happened is not a normal phenomenon, it is actually fear that is driving the prices down because if you see in the long run equity’s have always given a superior return than fixed deposit and post office. Although Fixed deposit/post office is very safe but for wealth maximization standpoint equity can never be ruled out. In the current situation, I would not rule out equity because I know in the long term these companies are bound to give good earnings and bound to perform well and create wealth for the investors.


Archit Gupta, Founder and CEO, ClearTax: When the markets are down over a long period, it indicates underlying problems in the economy. In order to boost the market sentiment, the central bank will likely cut interest rates, and it expects the banks and other lending institutions to offer the same to their customers. This results in lowering the interest rate on loans. When the banks reduce interest on loans, they will also lower the interest they would offer on deposits. This is not a good sign for investors as they will not earn an attractive rate of return on their investments. Therefore, fixed deposits and post office deposits are not a good option when the markets have fallen. When the markets are down, it is the time to invest in equities as they will be available at lower prices and investors can benefit from holding them for a long time and sell when the markets shoot up, however, a longer-term horizon of 7-10 years is recommended.

Harsh Jain Co-founder and COO, Groww: Every investor should have an investment plan and a diversified portfolio. A well-balanced portfolio will include FD, gold, debt, equity, etc, among others. Shifting and changing investments based on short term market conditions may not be a wise move.

What to do in the current market scenario?

Rachit Chawla: The current market scenario has become too volatile right now and people who have invested in good companies which pay high dividend should sit tight on it, they should increase the amount of SIP’s because in the long run we will get into the normal scenario and people who dare to increase their SIP at the moment will get multiple returns. Like Warren Buffett says “Be greedy when others are fearful and be fearful when others are greedy”.

Archit Gupta: The markets are currently down due to the outbreak and spread of coronavirus across the world. This has affected trade activities, and it has gone to the extent of countries imposing travel bans on each other. The Indian stock markets have crashed and have resulted in investors losing a whopping Rs 8 trillion as on 12 March 2020. However, this market fall is temporary, and it is not expected to stay the same for a long time. The markets will start picking up once the trade activities resume. As the markets have fallen, the investors may consider investing in equities of some companies as they are available at a much lower price. Many stocks have hit their multi-year low, thus making it a good time to buy equities or invest in equity mutual funds and hold them over the long-term to mitigate market volatility and earn good profits.

Harsh Jain: There is great volatility in the Indian markets. This is a worldwide phenomenon – all markets in the world are affected. Uncertainty over coronavirus spread is causing this volatility.

How investors can keep their money safe?

Rachit Chawla: When it comes to safety there are multiple definitions of it. People should always aim for a long term goal. Anything less than 6 years, the money can never be safe because of the volatility of the markets. So if you have a very long term goal then the markets are also the safe place to be. because eventually, all the dust settles down the economy will always be better going forward than it was. Other than this there are a lot of fixed deposit plans offered by govt. agencies one can also look at debt instruments or liquid mutual funds which is not linked with the equity market. Although for keeping the money safe it could be a very balanced approach with30% in debt, 20% in FD’s and 50% in equity for a longer-term horizon.

Archit Gupta: If you are to make short-term investments, then it’s advisable that you invest in options that are safe (in the sense that they are not affected much by the market conditions). If your main intention is to preserve your capital, then you may invest in government savings schemes such as NSC. Apart from that, you may also invest in bank or post office deposits. However, the returns you get on these investment options are lower. If you have a long-term investment horizon, then you may consider investing in mutual funds and stay away from redeeming your investments over the next five to ten years. This helps you in mitigating market volatility and provides good returns in the long run.

Harsh Jain: Like I said, a well balanced and diversified portfolio is meant to safeguard your money in all market conditions. Money required in the immediate future should be stored in bank/FD/liquid funds. Investors can also expose about 5% of the portfolio to gold to hedge their risks.




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