Risk appetite: How Indians are diversifying their savings portfolios

Expectedly, urban households display a greater inclination to adapt their investment choices to dynamic economic conditions

Indian households have traditionally relied heavily on physical assets and bank deposits as the cornerstone of their financial planning. However, a noticeable shift is underway — households are increasingly channelling their savings into mutual funds, insurance products, and pension schemes, seeking returns higher than those offered by banks. Net household financial savings in India rose from 7.7 per cent of gross domestic product (GDP) in 2019-20 to 11.7 per cent in 2020-21, largely because of precautionary and forced savings during the pandemic, but moderated thereafter to a multi-decade low of 5.3 per cent in 2022-23. A recent study in this