Market crash brings back dad’s favourite investment: Is it return of the fixed deposit? Here's what experts say

For decades, Indian households have relied on traditional savings avenues such as bank deposits, fixed deposits (FDs), gold and small savings schemes to secure their financial future. These instruments offered predictable returns, low risk and a simple way to plan long-term goals such as education, marriage and retirement. However, over the past few years, household investments have steadily shifted towards market-linked instruments like stocks, equity mutual funds and other high-return products, reflecting a growing appetite for risk among younger investors.

The change became more visible after the pandemic, when strong equity market returns and the rise of financial influencers encouraged investors to move away from conventional options. Higher potential returns, easy access to trading apps and a surge in online investment content pushed many first-time investors toward equities, often with limited understanding of market volatility.

But the recent sharp fall in markets has once again revived the debate over whether traditional options like FDs were underestimated. 

Amid the volatility, finance expert and writer Vivek Kaul highlighted the renewed relevance of fixed deposits. “Fixed deposits are boring. Your parents invested in them because they had very few options. The post-tax return on FDs doesn’t beat inflation,” he wrote, adding that the rise of financial influencers pushed many young investors toward stocks, mutual funds, crypto and derivatives in search of quick gains.

However, Kaul stressed that safety remains a critical factor often ignored in the chase for higher returns. “Money invested in a good bank’s FD is 100% safe – as good as guaranteed. And that matters because return of investment is as important, if not more, than return on investment,” he said.

Fixed deposits, often seen as outdated in the era of equities and gold, are once again gaining attention as market volatility rises. While they never fully disappeared from Indian households, their importance had reduced in recent years as investors chased higher returns in stocks, mutual funds and gold. Global uncertainty, shifting trade policies and unstable markets are now pushing many investors back towards safer options.

Data shows that a large share of household savings in India continues to remain in bank deposits, with a significant portion in fixed deposits, highlighting the enduring preference for safety over high returns. Even though equities and gold have delivered stronger performance in recent years, FDs have proved useful during market corrections by providing stability and protecting capital.

Interest rates on fixed deposits are also relatively attractive at present, with major banks offering around 6–7.5%, while small finance banks offer higher rates, albeit with slightly higher risk. Deposits up to ₹5 lakh per bank remain protected under the DICGC insurance scheme, and financial planners advise spreading funds across banks to reduce risk.

Despite concerns about inflation and taxation lowering real returns, experts say fixed deposits continue to play an important role as a defensive asset. In uncertain times, they act as a stable base in a portfolio, helping investors preserve capital, maintain liquidity and stay invested in equities without panic.

The lesson from recent volatility, experts say, is not that equities are wrong, but that balance matters. Fixed deposits may not create the fastest wealth, but in turbulent markets, the “revenge of the fixed deposit” is a reminder that safety and stability still have a place in every portfolio.