Yahoo Finance 9 fascinating insights into how millennials in India invest
The stock markets in India are on a roll. Both the Nifty50 and Sensex have touched record highs crossing 16,200 and 54,500 levels, respectively. The markets after tumbling last year on the news of lockdowns have more than doubled during this period.
According to Crowdwisdom360, Nifty's journey to 17,000 could be bumpy, but a bull run could lift it to 18,000 by December.
This has increased the interest and participation of the retail investors in the market. The number of dematerialised trading accounts increased to 55 million at the end of FY21 from 41 million at the beginning of FY21, an increase of 34.7 percent, data from SEBI showed.
On an average, about 1.2 million new demat accounts were opened every month in 2020-21 compared with 0.42 million per month during the preceding financial year.
Young investors flush with liquidity from savings due to work from home and are now thronging the stock markets.
Paytm Money, a wholly owned subsidiary of Paytm, which offers an all-in-one investment app has released its annual report which sheds interesting insights into the investing habits of young millennial India.
1. Young investors are starting early
Starting early is one of the mantras of achieving financial goals. Saving early in small amounts instills financial discipline, lessens the burden in later years and helps build corpus for marriage, children education and retirement with less stress.
The average age of Paytm Money users is 28 years. 81% of its users are below the age of 35 years. Over 60% of its users are first time users. On an average users invested Rs 70,000 in a year.
2. Financial awareness among young females high
Women participation in the workforce has been increasing over the years due to increase in literacy and changing societal patterns. However, it is often observed that even educated working women leave most of their financial decisions to their spouses or relatives.
It is heartening to see that female investors on Paytm Money invest double the money compared to male inventors.
Most of its users come from the states of Maharashtra, Uttar Pradesh, Delhi, Gujarat and Karnataka. Over 60% of its users are from beyond the metropolitan cities.
3. Youngsters follow asset allocation strategy
It is often said that asset allocation is key to achieving financial goals. Young investors are seen adopting a right mix of investment avenues to maximise returns and minimise risks.
Mutual funds emerged as the topmost asset class with 64% investments followed by equity 28% and gold 8%.
75% of the total transactions in mutual funds were made through SIPs highlighting financial discipline amongst young users. The Top 3 popular funds were Axis Bluechip Fund, SBI Small Cap Fund and Parag Parekh Flexi Cap Fund.
4. Intraday trading popular among young investors
Equity investors on an average hold Rs 46,000 worth of stocks, having traded or invested in 15 stocks. Intraday trading is popular with 41% users indulging in the same. The three most invested stocks were Tata Motors, Yes Bank and Vodafone Idea. The three most traded stocks were SBI, Yes Bank and ONGC.
5. ETFs popular among young investors
The young investors are conscious of the cost implications of investing in equities and mutual funds through brokerages. More than 25% of its equity investors invested in Exchange Traded Funds which have become popular due to product simplicity and cost effectiveness.
The average amount invested in ETFs is Rs 29,000. The Top 3 ETFs are Nippon India ETF Nifty IT, Nippon India Gold ETF and Nippon India ETF Nifty.
6. Young investors are using complex products
The users are not shying from using complex products such as futures and options. Nifty and Bank Nifty are the most popular index options while Reliance and ITC are the most popular stock options.
7. Youngsters start retirement planning in earnest
Young India is also starting early and preparing for their retirement. The average age of investors in the National Pension Scheme is 32 years and the average assets under management held by them is Rs, 26,500.
8. Gold continues to rule the roost
The young investor appreciates the importance of gold as a store of value and a hedge against inflation. In the age of bitcoin the traditional asset class is still popular. Gold as an alternative asset class is popular among the young investors. On an average users bought 1.27 grams of gold, an increase of 59% compared to previous year. Over 2 lakh investors created an SIP in Gold.
9. IPOs quite popular among young investors
In the last year a number of IPOs have been launched to tap the primary markets for funds. The young investor too has joined the party for listing as well as long term gains. The young investors applied for a lot of IPOs, IRFC, MTAR Tech and Railtel being the Top 3.
To sum up, the Paytm Money report provides some fascinating insights about the investment patterns of millennial India and could help the industry finetune their strategies accordingly.
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