With diverse investment options, recent data trends reveal interesting insights into where Indians prefer to park their savings.
The trust in savings accounts remains unwavering among Indians. Offering liquidity, ease of access, and nominal risk, savings accounts serve as a secure repository for funds, meeting short-term financial needs while providing a nominal interest rate. This preference for liquidity and safety reflects the practical approach many adopt in India.
With diverse investment options, recent data trends reveal interesting insights into where Indians prefer to park their savings. According to the latest report – Savings Quotient 2023 – by Bankbazaar.com, savings accounts continue to dominate as the most preferred option, followed closely by the increasing popularity of mutual funds, while fixed deposits (FDs) and stocks maintain the third and fourth positions, respectively.
Interestingly, 2023 is the second year in a row that mutual funds have overtaken fixed deposits (FDs) as the preferred investment. However, this year too, the humble savings bank account, though not an investment avenue, continues to be the top preference for 77% people to park their funds. As per the report, mutual funds/SIPs and FDs come in at the second and third spot and were chosen by 54% and 53% respondents, respectively.
Commenting on the report, Adhil Shetty, CEO, Bankbazar.com, says, “Mutual funds offer accessibility to a broad range of investors, including those with minimal capital. Investors can start with relatively small amounts, making it accessible to a larger segment of the population. Over the years, certain mutual funds have shown competitive returns compared to other investment avenues, attracting investors seeking potentially higher returns. However, investors must not ignore the risk involved.”
The report highlights that mutual funds were the second-most preferred investment for wealth warriors (61%), MoneyMooners (56%), and Early Jobbers (45%). It is interesting to note that FDs enjoyed almost equal popularity with the older cohorts of MoneyMooners (56%) and Wealth Warriors (57%) but lagged behind at wooing Early Jobbers (43%).
Across India, savings bank accounts remained the most popular financial product. In a shift from last year, FDs overtook mutual funds to become the second-most preferred investment in the North (62%), East (61%), and West (59%). Mutual funds were preferred by more men than women across age cohorts.
This year, the gender split between investments varies, but by slim margins. More men (79%) chose savings bank accounts than women (76%). However, compared to 2022, this year saw only 50% women investing in mutual funds compared to 56% men. Among Early Jobbers, 28% men invested in MFs compared to 21% women. The same trend continued for MoneyMooners (59% of men vs. 52% of women) and Wealth Warriors (63% of men vs. 59% of women).
The third most popular investment, fixed/recurring deposits, was chosen by 53% women compared to 50% men. The gap between men and women investing in stocks has widened marginally, from 7% last year to 8% in 2023. 39% women bought stocks this year compared to 47% men. Bucking last year’s trend, fewer women chose riskier investments, such as cryptocurrency, this year compared to men. PPF (26%) and real estate (19%) were the only two products chosen by an equal percentage of men and women.
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Mutual funds have emerged as a promising choice for many Indians seeking higher returns on their investments. With diverse options catering to various risk appetites and financial goals, mutual funds have garnered significant attention. Investing in stocks continues to appeal to those with an appetite for risk and a keen interest in market dynamics. While stocks offer the potential for significant gains, they come with a higher level of risk due to market volatility.
The choice of where to save and invest hinges on your financial goals and the pursuit of a secure financial future. There are many options available, but it is important to align your investments based on your goals and requirements.
