82.85% of Gen Y prefer investing in mutual funds, shows survey (2024)

Commenting on the launch of the report, Vibhor Mittal, Chief Operating Officer, Aspero said, “Understanding the intricate relationship between wealth creation and well-being of an individual is significant in financial planning. Our collaboration with Amaha for the report delves into the psychological aspects of wealth accumulation, emphasizing the importance of a balanced and informed approach to investment. By unravelling these insights, we at Aspero aim to guide investors towards strategies that not only enhance wealth but also contribute to their overall welfare."

The report underscores the substantial impact of digital platforms on contemporary investor decision-making and uncovers the ways individuals cope with stress through their investment selections. Geared towards a varied demographic of employed professionals, the survey explores risk tolerance, investment inclinations, and external factors. Through the integration of quantitative data, age-specific risk analysis, and qualitative perspectives, the report offers a comprehensive understanding of participants’ financial behaviours.

Key Discoveries: Uncovering the link between wealth and the mind

Varied risk profiles among age segments: Within the 46-60 age bracket, 36% of respondents characterize themselves as aggressive investors, whereas 32% prefer a conservative approach. The 26-45 age group consistently exhibits a moderate risk appetite influenced by factors such as market volatility, financial acumen, and apprehension about potential losses.

Investment choices and early adoption: Among surveyed individuals aged 21-25, over 60% show a preference for fixed deposits and the stock market, whereas 82.85% of those in the 26-35 age range favour mutual funds. Notably, 51% initiated their investment endeavours within the initial two years of their professional careers, showcasing proactive financial planning.

Prevalence of systematic investment plans (SIPs): A significant majority of users, exceeding 70%, exhibit a pronounced preference for SIPs, employing this investment strategy across diverse asset classes.

Equitable investment focus within the 36-45 age range: Individuals in the 36-45 age group distribute their investments evenly between addressing unforeseen emergencies and planning for their children’s future expenses. This reflects a dual commitment to protecting against unexpected challenges and preparing for the financial needs of the next generation.

Retirement savings preferences: Those with an aggressive investment approach target a retirement corpus in the range of ₹10-20 crores, while conservative investors lean towards a higher bracket of ₹20-50 crores. Interestingly, 32% of men find a ₹10-20 crore corpus acceptable, while women tend to prefer a range of ₹5-10 crores.

Decision-making patterns and emotional reactions: Aggressive investors base decisions on personal research, whereas conservative investors often seek guidance from their parents. Those with an aggressive approach are twice as likely to experience excitement and express a preference for a retirement corpus between ₹10-20 crores.

Strategies for managing stress: A crucial stress management strategy is diversification, with a significant portion opting for a well-balanced portfolio. Aggressive investors exhibit lower stress levels concerning perceived risks, while conservative investors express concerns about a lack of knowledge.

Allocation to fixed income instruments: Approximately 36% allocate 6-20% of their portfolio to fixed income instruments. Although fixed deposits (FDs) remain popular, there is a need for enhanced investor education on alternative instruments.

Perception of fixed income instruments: The majority of respondents view fixed income instruments either neutrally or as stress relievers. Ambitious investors, aiming for quicker returns, perceive these instruments as incongruent with their goals, preferring riskier assets.

Understanding financial freedom: Respondents associate financial freedom with having control over time, independent decision-making without financial constraints, and achieving a debt-free status.

The insights from the report hold significant implications for retail investors in India, underscoring the importance of tailored financial education. The changing investment preferences signal a maturation of the investor community, presenting an opportunity for institutions to guide investors through emerging assets.

Psychological factors, such as excitement and stress management through diversification, underscore the importance of emotional intelligence in financial education. Resources should not only provide information but also address emotional challenges, advocating for a holistic approach. The persistent reliance on fixed income, especially fixed deposits, indicates a lasting preference for perceived safety. In essence, these trends illustrate the evolving landscape of retail investing in India, highlighting the necessity of adapting financial education for a resilient and well-informed financial community.

The collaboration between Aspero and Amaha represents a positive stride in fostering mental health awareness within the financial sector. By illuminating the psychological ramifications of wealth creation and offering insights into the diverse financial experiences across generations, the report has the potential to empower individuals. It can enable them to make well-informed financial decisions and, in the process, prioritize their mental well-being.

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Published: 19 Dec 2023, 12:52 PM IST