What % of the India population invests in the stock market?

According to the ‘Consumer Spending Outlook 2022’ report by community platform LocalCircles, with the onset of a third wave in the country, Indians are likely to save more and spend less on discretionary items in 2022.

The survey, which included 47,000 households from 391 districts in India, sought to map consumer sentiment in 2022 regarding the purchase of residential homes, vehicles, health insurance, jewelry, equities and mutual funds.

According to the latest Reserve Bank of India survey, India’s consumer confidence index stood at 62.3 in November, indicating positive sentiments with signs of improvement from 57.7 the previous year. While the disruptions in 2020 and 2021 were significant, the economic recovery in most sectors, including the most severely impacted, such as travel and tourism, has been significant.

  • 83% don’t plan to make any residential home purchases in 2022 despite housing sales rising 71% in 2021
  • 1 in 6 families is likely to increase their health coverage
  • Only 1 in 6 families is likely to spend on a car
  • 1 in 7 families is likely to spend on gold, diamond, silver or multiple types of
  • 2 in 5 families likely to prefer investment in equities or mutual funds in 2022

So, why don’t most Indians invest in stocks?

  • Conservative attitude

There is no reward if there is no risk. There is risk associated with investing in stock markets, but if you do it with proper research and understanding, you have a better chance of reaping profits far greater than the 5% interest rate your bank can offer you per year.

Of course, no one can predict what will happen with certainty, but if you know enough about the market, you can predict some of the rises and your money will grow much faster than in an FD account.

  • Lack of proper financial literacy

One major factor preventing Indians from investing in stock markets is a lack of knowledge about them. A lot of people believe that the stock market is difficult to understand. That thought could be rooted in the fact that no one has ever attempted to teach them about the stock market and how to invest in it. One way to address this is to educate people about why they should invest in the stock market.

  • Lack of capital

This is yet another result of a need for more stock market knowledge. Most people hear success stories about Indian stock market titans and believe they need a large sum of money to begin investing in stock markets. But this is completely incorrect. You can begin with as little as Rs. 500.

  • Preferences towards physical assets like gold

Buying gold is also closely related to our culture, and we even have special days dedicated to it. Without a doubt, gold is where the majority of Indian investment is directed. We have developed a trust in gold because it is closely associated with the various cultures of India.

However, according to the price on November 17th, 2021, gold prices have dropped about 3% in the last year. At the same time, the Nifty has gained approximately 40% over the same time period. To put it another way, if you had invested Rs.1 lakh in gold on November 17th, 2020, you would have lost Rs.3000 by now. On the other hand, if you had invested in the Nifty during the same time period, you would have made Rs. 40,000.

  • Lack of trust

A lack of knowledge about stock market opportunities directly leads to a lack of trust. People will be hesitant to trust something they need to fully comprehend. At the same time, people will consider scam stories, which may turn them off.

Conclusion 

The key to resolving the majority of the issues above is to raise awareness about the workings of stock market investments.

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