 "Statsguru: A shift from bank deposits to real estate and securities")
As Trumponomics affects the valuation of different investment streams, it may be a good time to assess how Indian households’ preferences are changing.
The share in gross domestic product (GDP) of Indian households’ net financial savings – the difference between financial asset and liability flows – fell to a five-decade low of 5 per cent in 2022-23, before inching up to 5.3 per cent in 2023-24 (Chart 1). This means households’ financial assets now are not growing as fast as liabilities. The government has downplayed this phenomenon by saying houses and other consumer durables are being purchased on mortgage.
As far as broader investment streams are concerned, 51.3 per cent of household assets in 2023-24 were in real estate, against 48 per cent in 2020-21. The share of equities increased from 4.3 per cent to 5.8 per cent during the same period, according to the StockGro Investor Behavior Index (Chart 2).
Bank deposits, meanwhile, have become less attractive than other assets in recent years. While gold prices (in dollar terms) have more than doubled since March 2018, the growth in bank deposit rates has remained tepid, leading to investors’ shift towards real estate and stocks (Chart 3).
The Indian investor base is getting younger, with those aged below 30 years accounting for 40 per cent of investors participating in the market in 2023-24 – nearly double the share in 2017-18 figures (Chart 4).
Investors with less than three years of experience have shown a stronger preference for stocks and mutual funds, while the more experienced ones are choosing real estate, according to the index, which took into account the views of 50,000 participants (Chart 5).
More women than men parked their funds in mutual funds and gold, while 39 per cent of the men surveyed invested in stocks, compared with 27 per cent women (Chart 6).
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