Saving and Investment Patterns
- Indians save a lot – about 27% of take home pay is saved, and 25% is invested. This is higher than the global average, and much higher than Europe and the Americas.
- Regarding willingness to invest in stocks compared to 5 years ago, 51% of Indians are more interested (as against 27% globally) and 54% would like to invest in equity over the next 12 months.
- When asked about cash as a proportion of savings and investment portfolios, the figure was 59% for India, which was also the global average. The main reasons cited for holding cash deposits was the need to be flexible and the need to feel safe.
- When asked what would encourage Indians to invest more of their cash holdings into other investments, there were four suggestions that took precedence over the rest:
- Guaranteed returns from investments
- Better knowledge about investing
- Easy to understand investment solutions
- Assurance that the initial investment would not get lost
- The most popular investments of Indians (outside cash)
- Life insurance (70%)
- Fixed deposits (64%)
- Shares (46%)
- Mutual funds investing in Indian equity (33%)
- Insurance products such as endowment plans and ULIPs (28%)
- Fixed maturity plans (27%)
- Tax free bonds (25%)
- Gold ETFs (22%)
- Liquid mutual funds (20%)
- Mutual funds – investing in feeder funds and international funds (19%)
- Corporate bonds and deposits (18%)
- Debt mutual funds (14%)
- ETFs – others (6%)
- Other – 7%
- In a comparison between fixed maturity plans, or FMPs, fixed deposits, or FDs, and liquid funds, FDs was the clear winner followed by FMPs. The predominant reasons being:
- FDs are perceived as the safer option (68%)
- FDs provide a sense of guarantee (64%)
- FDs are a more liquid option (41%)
- Knowledge of FDs is more than that compared to the other 2 products (38%)
- 89% of Indians do not invest outside the country.
Next: Preparing for life events
