Majority of young India has investment vision for 3yrs: PHD Chamber

The survey reveals that youngsters have yet to acquire a swing to investing in equities and mutual funds

October 25, 2013 3:26 IST | India Infoline News Service
Majority of the youngsters (57%) are inclined towards fixed income schemes followed by 22% in real estate, 9% in equity market, 5% in gold and silver and 7% in others reveals a survey of PHD Chamber of Commerce and Industry on latest investment patters of Working Young.
Over 43% of retail investors, working in government, public and private sectors within an age group, comprising 25 to  35 years, prefer to park their surpluses for a time horizon of more than 3 years in different investment instruments that usually fetch them annual rate of returns of over 8%,  according them with a perfect sense of security with lowest element of  risks,  32% of such investors, however, prefer to trade for a period of less than 3 years whereas 14% choose above 5 years as their investment time horizon and barely 11% go in for lock in period of less than one year, adds the findings of the survey in which the PHD Chamber’s research bureau interviewed nearly 1400 young working men and women.
The survey conducted in the month of September 2013, however, points out that the working investors are guided more by their family members to make investments for the revealed period of time for which consultancy from financial advisors is hardly sought.
The survey reveals that youngsters have yet to acquire a swing to investing in equities and mutual funds as only 9% of them say that they invest in equities and mutual funds in areas of gems and jewellery,  oil and gas,  FMCGs in addition to steel , information technology and automobiles.
The findings of the survey, clearly indicate that even young investors in retail segments have yet to develop faculties for availing benefits of risks for higher gains for creating wealth and the reason attributed for this is entirely the current economic scenario, which arose out of global financial shocks of 2008 after which the equity markets remained extremely volatile and have not behaved well as per aspirations of present working class, especially in working segment, said the survey.
Real estate is another area in which the working young is tilted towards but since it requires much higher premium and carries higher risks with elements of unsafe returns, a small proportion of respondents (22%) that participated in the survey showed a greater desire to invest in acquire properties at this age.
The survey suggests that the country’s savings in physical assets are still high and is around 50%. In spite of various reforms in the financial sector, the overall investment into financial assets has not shown the commensurate increase.
Amidst worsening external environment, it was also observed that investors were keener towards safe and less risky investments as compared with highly volatile investment avenues such as stock market and preferred for a traditional mode of investment like fixed income (57%) and real estate (22%).
However, the Chamber asserts that the demographic transition will drive the financial investments in the country, going forward. The significant increase in younger population will offer a huge market for financial products like--equity, mutual funds, insurance products and wealth management etc. and thereby, offers a structural opportunity for enormous growth of financial investments in the country in coming years.
The proportion of population in the working age group of 15-64 years will be expanding significantly in the coming years. Hence, India has a great comparative advantage and has huge opportunities to save and invest in productive financial instruments, said the Chamber.

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