Simplified education, tech access can lead to informed investment choices, empower growth

The digital technology play is in a way democratising and redefining the culture of investing and wealth creation in India. The financial inclusion driven by deeper smartphone penetration and the rise of digital investment platforms has made investing, be it in traditional, market linked or new age (ESG, Real Estate Investment Trusts (REITs), InvITs, cryptocurrencies, etc.)avenues, accessible and convenient.

As per the National Stock Exchange (NSE) data, the number of unique investors directly investing in the stock market has grown to 80 million for the first time. According to NSE, new investors are driving up the number. The SIP (systematic investment plan) accounts for mutual fund investing have grown to 7,30,02,604 in October from 7,12,93,738 in September.

New age investing platforms are playing the role of a great enabler in unlocking the value proposition in investing for a large number of aspiring populations of the country. Also Read: In this phase of the transformation of investment choices and habits, experienced investors are exploring options to diversify their investment portfolios.

Gen Z and Gen X investors, on the other hand, are showing proclivity towards adding new age investment elements to their portfolios. Having said that, we are living in a phase where social media has become the informal first port of call for investors to gather information and peer influence often shapes investment decisions.

There is a possibility that the overabundance of information and opinion could end up overwhelming a larger section of potential investors. Also Read: Savings with purpose and investments based on fiscal prudence are at the heart of wealth creation. For instance, the robust economic growth outlook of the country and the capability to beat inflation could be the two potent triggers for investors to pump money into the stock market.

However, an asset class like equity faces volatility and one needs to allocate that much part of her/his investment which is within her/his risk tolerance and with which he/she can stay invested with a long term outlook. Mutual fund SIP is an effective tool to reduce the impact of market volatility on investment.

However, investing in SIPs needs to be in line with the investment goals, preferred time horizons and risk appetite. The do it yourself (DIY) has emerged as a popular choice among new age investors due to the availability of abundant information and opinions on the web. However, at the end of the day, managing a portfolio requires in depth research and proven expertise.

Earning profits during the bull markets is just one part of the story. The portfolio needs to be resilient enough to withstand the volatility of the markets as well. Young and tech savvy individuals, such as college students, young professionals, and those new to investing, are geared up to the idea of investing.

In the fiscal year 2022 23, individuals aged between 25 and 35 accounted for a quarter of the overall mutual fund folios. On the back of the growing aspirations of India's middle class, there is a noticeable rise in financial awareness, prompting increased interest in exploring diverse asset classes.

However, the lack of financial knowledge and guidance necessary for informed decision making is a handicap. To facilitate this growing interest, it becomes imperative to demystify complex financial terms and provide individuals with the essential knowledge required to navigate the financial landscape.

This need is particularly relevant for those venturing into investments for the first time, aiming to bridge the gap between eagerness and comprehension. As per Reserve Bank of India (RBI) data, in FY23, approximately 10.27 lakh crore was held in bank deposits. It is also important to note that only around 1.8 lakh crore of household savings were directed towards mutual funds via SIPs during the same period.

In 2024, the need of the hour is to declutter the scenario with insights led simplified education modules with tech enabled accessibility which will empower a burgeoning demographic, ensuring they can make informed investment choices and contribute to the economic development of the nation. (The author of this article is the product lead at Indivest) Livemint tops charts as the fastest growing news website in the world to know more.

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