Most of us would be investing our money in Fixed Deposits, Real Estate, Mutual Funds etc.
But have you ever wondered where do Indians cumulatively invest their money and in what proportions? Do you know how much worth of Gold we Indians own?
Read on to know the answer to aforementioned questions and some other interesting facts.
Total individual wealth in India or the money owned by all individuals in India (i.e. not considering the government and institutional money) is divided primarily into 2 segments –
a) Physical Assets – These are investment assets which in broad terms you can “touch and feel” i.e. there is a physical presence of them, this includes Gold, Real Estate etc.
b) Financial Assets – As name suggests these are investment instruments where you invest your money for a certain period of time. This includes Fixed Deposits, Mutual Funds, Equity Shares etc.
Indians have traditionally been investing largely in physical assets, however post 2010 Financial Assets have started growing rapidly and now they constitute a bigger chunk of the overall individual wealth in India.
Following table on overall individual wealth in India, illustrates the point –
Yes, that’s right! Cumulatively we own Rs. 3 Crore Crore and that’s only all the money
owned by people like you and me.
Now, let’s deepdive a bit more and look at physical assets first.
As expected, Gold is by far the biggest investment asset in India, also India leads the world in total gold consumption, read news article here.
Gold is followed closely by Real Estate, however though growth in investments in real estate is sluggish, Gold continues to be one of the fastest growing investment asset class in India. Following table illustrates the point further –
Surprisingly enough there is a segment of population which also invests in Platinum and their investment size is growing extremely rapidly.
Let’s look at all classes in Financial Assets.
As expected, majority of Indian money is invested in Fixed Deposits which constitutes 20%+ of Financial Assets bucket.
Direct equity is a big component, however it is extremely polarised due to holding of few individuals i.e. people like Rakesh Jhunjhunwala will be a major driving factor of this bucket.
One unfortunate observation from the table above is that insurance still continues to be viewed as an investment option by many Indians and it still is one of the favourite investment vehicle after Fixed Deposit for many retail investor. Insurance continues to be preferred choice due to the heavy promotion by many Insurance companies about their sleazy ULIP and Endowment Plans, which neither add sufficient value to an investors from returns pov nor provide adequate returns.
We need to cumulatively educate Indian investor about the perils of investing in Insurance products vis a vis buying an insurance term plan and investing in mutual funds.
Still a very large chunk of Indians keep their money idle in Savings Bank Account, which continues to be at 4th preferred investment choice. We are aiming to change this scenario with FinoZen where we are educating Indians about the merits of keeping their money in liquid fund instead of savings bank account as liquid funds provide all functionalities of a bank account but give significantly higher and regular returns.
Mutual Fund Investment continues to be a small proportion of the overall investment bucket, currently standing at around 3.5%. Mutual Fund is a preferred investment option for the upper strata of Indian society, its high time now that Mutual Fund penetration increases in other segments of society too as it is one of the best way for a retail investor to invest his money.