Best Investment During a Volatile Market? Fixed Deposits Could Be It

When the equity markets tumble, crypto takes a nosedive, and even gold shows inconsistent trends, Indian investors often turn to one of the most traditional instruments: Fixed Deposits (FDs). In a time when volatility is the norm, not the exception, the humble FD continues to offer what few others can—stability, safety, and assured returns.

But are FDs really the best investment choice during market turbulence in 2025? Let’s unpack the data, explore trends, and understand why this time-tested financial product remains relevant.

Volatility in 2025: A Snapshot

According to data from the NSE and BSE, the first quarter of 2025 saw the Nifty 50 index dip by over 6.2% amid global geopolitical tensions, oil price surges, and fears of a slowdown in the US and China. Meanwhile, cryptocurrencies lost over 12% in Q1 2025, wiping out gains made in late 2024.

Even traditionally "safe" assets like gold experienced price fluctuations of 4-6% within weeks, according to the India Bullion & Jewellers Association.

In contrast, Fixed Deposit interest rates in India, though undergoing a dip owing to the Reserve Bank of India’s (RBI) repo rate cut, has been quite consistent. For example, Ujjivan Small Finance Bank offers FD rates up to 7.75%* p.a. for regular depositors and 8.25%* p.a. for senior citizens. *T&C apply.

Why Fixed Deposits Make Sense During Market Turbulence

1. Capital Protection with Higher Returns

FDs are non-market linked, which means the principal and interest are unaffected by market dips. Whether the Sensex crashes or the rupee weakens, your FD amount remains safe and continues to earn a pre-agreed rate of interest. Additionally, with institutions like Ujjivan, you can earn higher interest on your FD investment. 

2. Tax Benefits on 5-Year FDs

Section 80C of the Income Tax Act allows deductions of up to ₹1.5 lakh for investments in 5-year Tax Saving FDs—making them a dual-purpose tool for wealth preservation and tax planning. Please note that Tax Saving FD comes with a lock-in period of 5 years, prior to which withdrawal isn’t allowed.

3. Attractive Returns in 2025

Small Finance Banks (SFBs) like Ujjivan SFB are offering high-interest FDs. You can select from a range of FD products and select the one that fits your financial goals. These are risk-free returns, which in uncertain markets can sometimes outperform real returns from volatile instruments.

4. 100% Paperless Digital Fixed Deposit

You can now open a FD from the comfort of your couch, thanks to Digital Fixed Deposits. All you need to do is complete your Video KYC with PAN and Aadhar details. Please ensure that your Aadhar is linked to your registered mobile number. This is necessary for OPT (One-Time Password) verification.

5. Flexible Tenures and Overdraft Facility

FDs range from 7 days to 10 years (callable FDs), offering maximum flexibility. Additionally, in times of financial crunch, you can opt for overdraft against FD, without breaking the deposit—a smart way to stay liquid without touching your capital.