Having burnt his fingers badly in the stock markets in 2009 and then seeing his mutual fund investments dwindling to a fraction of the invested amount the next year, it was back to the traditional investment instruments for Rishab.

“I may not get 50-100 per cent returns that equity may sometimes give. But I can be sure about how much my investment today would app­reciate to in 3-5 years. That makes my planning for the future much easier,” he says. Rishab is not the only one to think so. For millions of investors in India, investment is now all about getting back to the basics. Nothing gives you the returns now the way real estate or gold does and no other instruments give you promised returns.

If good old fixed deposits, NSC and real estate are the bird in hand, the great future from stocks is the bird in the bush.

“I may not get the 50 or 100 per cent profit that equity may give. But my fixed deposits and NSC tell me exactly what my investments will be worth in three or five years. Planning for the future is so much less painful,” Rishab sighs in relief.

Millions of Indians are thinking the same — which is, nothing gives returns the way real estate or gold does, nothing delivers on promise as fixed deposits and NSS do. They are deserting the stock market as if it is the plague. And the dream merchants suddenly find they have no clients left, nor any business.

Fidelity, the world’s largest fund manager with $310 billion worth of assets under management, has just announced that it is quitting India. Is this the way other mutual funds will go? No one can tell for sure, but there are straws in the wind. When the average investor Indian loses faith in mutual fund schemes, the signals are dire for the entire market.

Look at the plight of the most famous stock on Indian bourses — Reliance Industries. In what was widely seen as an act to shore up the stock, the company recently announced a Rs 10,000 crore share buyback. The stock remains listless.

Some have fallen by the wayside. Some have redefined their core roles. Both Indiabulls and IndiaInfoline began life as stockbrokers and grew huge in that role. Today, stockbroking is a small part of their businesses and they are better known as power generator or mortgage taker.

As stocks recede — and God alone knows when they will improve — the vacuum is getting filled by other options. Real estate for the average investor has two advantages: it can both be a home and an investment. As an investment there is no denying its potential for good returns, even in a climate where real estate companies are not doing well.

In four years, 11 of India’s 15 biggest cities have seen property prices grow by between 40 and 250 per cent, according to the National Housing Bank. Chennai, Bhopal and Faridabad have seen prices double.

Gold, the old faithful, too is in demand. Anyone who invested money in gold two years ago has added two-thirds to his money. Gold in January 2010 was going for Rs 1,560 a gm. A year later it was Rs 1,890. Last month it was Rs 2,570.

There was a time when the average investor swore by mutual funds and Ulips. No longer so. New mutual fund schemes are few and far between. Clearly, the market options are shrinking. In all this dimness, plenty of other instruments that give decent, risk-free returns stand out like shining beacon. Here they are:

Gold

It’s something generations of Indian women have hoarded. Gold is a good metal that holds an umbrella over you for that unexpected rainy day. It will not let you down. Never mind that of late gold prices have been a bit static, but think of what its price was, say, five year ago, and where it is now – and you know the winner.

Uma Manikandan, 52, a Chennai housewife, now and then buys small gold jewellery for her daughter in preparation for her wedding, whenever that happens. In September 2010 she picked up a 25 gm necklace for Rs 45,000. At the time, gold was Rs 1,760 a gm.

In the same month, she went in for an easy payment option — basically like a deposit scheme — offered by her jeweller. “The scheme entailed paying the jeweller Rs 5,000 a month for 11 months. In the 12th month we could get a piece of jewellery worth Rs 60,000. That money would have given us a big necklace. But in September last year, the 12th month, gold was ruling at Rs 2,520 a gm. We got a necklace weighing only 28 gm, that too after paying Rs 13,000 more,” she says. The final price: Rs 73,000. She was not exactly ecstatic about it, but now when gold has inched up a bit, she reflects back and thinks it was a good buy. Similar schemes have been on offer at many jewelers around the country.

The common perception is that gold cannot be easily resold when you need cash, except at pawnbrokers. Mostly true — and, therefore, partly untrue. There are companies and banks that give you loans against gold. Plenty of people are taking advantage of this.

“It is not just traders and businessmen who take gold loans from us. We have had young couples pledge gold for loans they used to make the down payment for new homes,” says George Alexander Muthoot, managing director of Muthoot Finance.

The gold just moves from your locker to the finance firm and can be got back on repayment of the loans. The downside is: if fail to repay, you lose your gold.

Another beauty of gold is that its prices have rarely seen a precipitous drop. In that sense, it is quite a safe investment.

In 2005 Shivam Kumar had bought a 3BHK flat in Indirapuram, a neighbourhood in Ghazibad in Uttar Pradesh but just one step outside Delhi. He had paid Rs 35 lakh, including a Rs 10 lakh down payment. He had borrowed from banks to pay the rest. Last year he sold the flat and got Rs 75 lakh — which gave him a return of 150 per cent. He also earned rent from it for six years

You can’t really beat that. Small wonder, people still invest in real estate. According to the National Housing Board, taking 2007 as the base, real estate prices in cities in April-June last year were between 50 and 148 per cent higher. There were exceptions like Hyderabad, Jaipur and Bangalore, where prices dipped a bit.

And now, of course, you have the option to buy real estate abroad also, where prices have nose-dived. Rich Indians are doing it. But even in India, most places offer good scope for appreciation of price, provided you choose intelligently and carefully, as you do in any other asset category, says Anil Rego, a financial planner. Issues such as land title, disputes etc must be scrutinised carefully, he suggests.

As in any other industry, demand-supply determines prices in real estate also. At the moment prices have peaked, but are expected to begin dropping in view of the excess supply. In fact, the Reserve Bank of India expressed concerns last month that despite fewer deals, real estate prices continue have not yet fallen.

Yet, real estate can be a pot of gold if you can hold it for s slightly longer term. Ask Shivam.

Bank deposits

In the stock market’s peak in the mid-2000s, bank deposits were somewhat like Bangalore of the seventies, meant only for the retired, the pensioned and the senior citizen for whom the trading ring was another planet.

All that has changed. Brash young things who disdained fixed deposits until the other day, are making a beeline to their banks. Such is the draw of the 9.50-10 per cent interest banks are giving even on one-year deposits.

Vaidehi Karthik recently put all his Rs 1 lakh performance bonus in a one-year fixed deposit that will earn 10.25 per cent interest. “When that matures I will use the money for the down payment for a car I plan to buy next year,” exults the 26-year-old PR person.

Millions of Vaidehis today repose their faith in banks, which at the end of December had Rs 57,10,000 crore in deposits. Exactly a year earlier, the figure was Rs 49,71,000 crore.

Safe and not sorry, as the highway signs say.

Debentures

Believe it or not, there was a time when bonds were very popular, thanks to Dhirubhai Ambani who relentless efforts to sell Reliance’s first convertible debenture in 1979. The issue was oversubscribed six times, was a precursor to many more that followed from other companies.

Then the tide turned in the mid-nineties as banks began to pay more on deposits. Around seven years back, the epitaph for debentures almost got written, as stocks and mutual funds swept the investor off his feet.

With high coupon rates, bonds are back. Witness the six non-convertible issues that raised Rs 4,388 crore between April and September last year. Kamal Bansal, investment banking head of Bonanza Portfolio, explains the obvious: “In an unpredictable equity market debt products give a reasonable rate of interest. They are a good option.”

Recent issues offered very high rates of 12.50 to 13.25 per cent. Though not with the same safety quotient as bank deposits, non-convertible bonds can be picked up as long as the party lasts, which may not be very long. Coupon rates may drop along with bank deposit rates, the latter a distinct possibility in the near term.

Unlike the equity market where trading volumes are high, retail trading in binds is just a trickle. This calls for investors to stay invested for the entire tenure of the bonds which is three or five years.

PPF, NSC

If you have never thought of the public provident fund (PPF) as a good investment avenue because of its long lock-in period, maybe you need a rethink. There is nothing like PPF in terms of tax liability (nil), stability of interest and safety. Only, you cannot invest more than Rs 1 lakh a year.

In taxability, PPF scores over NSC, the income from the latter and other post office schemes being taxable. But NSC is not to be ignored, essentially because of two factors: one, it is a government scheme (therefore, safe), and two, it is of a mid-term duration. Besides, NSC can be used as collateral for loans. Abhay Gothankar, a sous chef in a Mumbai hotel, is thankful to his father for forcing him to invest in NSC. He had done so grudgingly: “NSC was old fashioned and returns were low.” But then a medical emergency arose at home and he was low on money. He managed to raise a loan against his NSC. “It is far more useful than my Ulip investments. My Ulip value is not even half the premium I have paid so far.”

PO schemes

Few of us remember when we last stepped into a post office. Many of us don’t even know that a post office is also a bank. In our quest for investment safety, we are beginning to rediscover the post office. The postal monthly income scheme provides a decent interest of 8.2 per cent. For senior citizens it is 9 per cent in a five-year scheme, not bad when compared to 9.75 per cent offered by State Bank of India for a five- year deposit. Plus, a post office is always somewhere near you. But the drag is that you can’t invest more than Rs 4.5 lakh as an individual and Rs 9 lakh as a couple.

Safe? Absolutely. Oh, if only the postal people were a little less grouchy.

(Arnav Pandya is a CA and certified financial planner based in Mumbai)