Parul
New investors in India are more inclined toward stocks and mutual funds, while those with over a decade of experience prefer a mix of real estate, gold, and equity investments, according to a report by StockGro and 1Lattice.
The study highlights how investment preferences shift with experience. It shows that Investors with less than a year of experience allocate nearly half (48 per cent) of their funds to mutual funds and 31 per cent to stocks. In contrast, only 13 per cent of their portfolio is dedicated to gold and silver, and just 6 per cent to real estate.
On the other hand, experienced investors–those with over 10 years in the market–show a different approach. They invest only 25 per cent in mutual funds but allocate more to real estate (17 per cent) and gold and silver (18 per cent). This indicates a preference for stable assets among seasoned investors, while newer investors lean towards high-risk, high-return opportunities.
The increasing interest in stocks is reflected in the surge of demat accounts in India. The report mentioned that the number of demat accounts more than doubled post-COVID-19, rising from 3.6 crore in March 2019 to 7.7 crore in November 2021. A significant portion of these accounts belong to first-time investors under the age of 30, highlighting a growing appetite for equities.
Additionally, trading in futures and options (F&O) saw a 500 per cent increase between FY19 and FY21. However, 90 per cent of traders reported losses, underlining the need for financial literacy and technical expertise.
The report also sheds light on the reasons behind investment choices. About 42 per cent of investors focus on long-term wealth creation, while 32 per cent seek passive income. Another 20 per cent invest for upskilling, and 6 per cent aim to beat inflation.
Stock market participation remains strong, the survey in the report stated that 81 per cent of surveyed investors having invested in equities. Notably, 45 per cent of young investors (under 35) now prefer stocks as their primary investment, marking a shift from traditional savings instruments to direct equity investments.
This change is driven by improved financial awareness, better access to investment tools, and a rising focus on wealth creation.
Overall, newer investors are more focused on stocks and mutual funds, while experienced investors diversify their portfolios with real estate and gold.
The report suggests that financial knowledge and experience play a crucial role in shaping investment strategies over time.
