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In recent years, it has been observed that investment has become the backbone of countries that are attempting to grow their economies as it gives a strong stimulus to the GDP. It is therefore necessary for the public to research about and invest in various emerging investment avenues and encourage international investment opportunities as well. Fundamentally in investing,return and risk are like the two sides of a coin, thus in one’s portfolio, one might have an equal possibility to face either of them. Investment patterns largely depend on the preferences of how the respondent views their savings today, for tomorrow.

Investment in India has become more of a necessity than a business lifestyle. The relationship between investment and savings hasn’t changed much since the adoption of economic reforms in 1991, but the investing and saving pattern of Indians has come a long way since then, especially with the introduction of new investment horizons in this digital era.

People have been shying away from investments in the conventional Fixed Deposits and Gold, and are now more inclined towards investing in the equity markets, especially, after the relentless stock market rally seen since March 2020. Angel Broking, a leading securities firm established in 1987, reports that 72 per cent of the 510,000 customers it added from October to December, had never traded stocks before. Another factor attracting investors to the stock market is the wider adoption of technology and better internet penetration especially for tier-2 cities. Rise of trading platforms with negligible brokerage along with social media influencers on youtube and instagram who provide stock market insights and trading strategies has only aided in the process.


One of the most encouraging transitions seen in the investment pattern in India is that the changes in the financial services industry has improved financial inclusion among Indian women. The number of female investors has been constantly rising and mutual funds have come up as the most preferred investment option regardless of their age and income bracket. According to a recent survey by Groww, an online investment platform, women in the age group of 18-25 were three times more likely to choose high risk, high return asset classes like stocks rather than traditional classes like gold and FDs. It signifies a shift in the financial awareness and risk appetite of women, especially young millennials who are more than willing to explore and play against the odds.


Even greater transition has been seen in the millennials. Being the core income-earners in their homes, millennials are the ones making most of the prominent financial decisions in their respective families which makes their investment preferences more significant than ever. A drastic change has come in the way boomers look at money and how millennials perceive it. Most of the millennials do not rely on a single income source and are constantly searching for passive income sources. This is the reason why most of the millennials have started to invest in high-yield opportunities like SIPs, stocks, mutual funds, NFTs, ULIPs and digital gold. This transition has been aided by the recent rise in the startup IPOs like Nykaa, Zomato, Paytm in which the young generation has been actively taking part. Millennials along with some part of the GenZ population also do not fear making investments in alternative investment opportunities such as cryptocurrencies. The high volatility and uncertainty regarding the crypto market does not stop these intrepid investors in making huge bets.


Talking about the investment pattern changes observed in High Net Worth Individuals’ (HNIs) portfolios, a completely different change has been recorded. In India, people earning worth of 5 crore rupees per annum are usually considered to be HNIs and these are the people who have a Lion’s share in the Indian GDP. Conventionally, this class of people preferred a combination of debt and equity in their investments, but recently a shift towards alternative asset classes has been observed. A major chunk of their investments are made in the real estate market, especially in the commercial real estate sector.


What we have witnessed is that a drastic change in the investment pattern has come in the past few years and a greater generational gap has been observed when it comes to investment choices. But, it will be wrong to not acknowledge the fact that much of this change has been stimulated by the coming of the pandemic. The pandemic brought a major hit on the earnings and savings of people, especially the middle class and the consequence was that people had to align and adjust their portfolios to ensure long term stability. Due to the pandemic, people have become more inclined towards having insurance and a greater emergency fund. Also, people are not only prioritizing insurance but also the amount of insurance cover they are buying, which has also gone up.


As discussed above, people have been preferring riskier investments but due to the pandemic, people have become a little conservative in the past few months, although this is not the same for all classes of investors. The Public Provident Fund (PPF) also has gained more popularity due to its risk free and tax saving nature, especially for the people prioritizing their retirement fund.


Every rational investor takes all possible measures to come up with a portfolio that perfectly aligns with his returns expectations while not exceeding his risk appetite. The market is flooded with all kinds of investment options from completely risk free options like bank deposits to very risky investments like stocks and mutual funds. A great change in people’s preferences has been witnessed and the change has been different for different groups of people. The transition has been very distinct for dissimilar age groups, income groups, genders as well as for dissimilar periods of time. The priorities of Indians have changed over time with due importance given to health and life insurance and long term security.


By Kshitij Agarwal

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