Investment Preferences Evolving: New vs. Experienced Indian Investors

A new report by StockGro and 1Lattice reveals that new investors in India prefer stocks and mutual funds, while experienced ones opt for real estate and gold. The study highlights the changing investment strategies based on experience, emphasizing the influence of financial knowledge on investment choices.

A recent report by StockGro and 1Lattice showcases how investment preferences among Indian investors are shifting with experience. New investors are increasingly inclined toward stocks and mutual funds, while those with more than a decade of experience favor a diversified mix of real estate, gold, and equities.

The study reveals that new investors, with less than a year of market participation, allocate nearly half of their funds to mutual funds and 31% to stocks. In contrast, only 13% of their investments are in gold and silver, and a mere 6% in real estate.

Experienced investors, those active for over 10 years, tend to invest 25% in mutual funds, while real estate and gold receive 17% and 18% of their portfolios, respectively. This points to a preference for more stable assets among seasoned investors. The number of demat accounts in India surged from 3.6 crore in March 2019 to 7.7 crore in November 2021, with many belonging to first-time investors under 30, illustrating a growing interest in equities.

Additionally, trading in futures and options has seen a dramatic 500% increase between FY19 and FY21, though 90% of traders reported losses, underscoring the need for improved financial literacy and technical know-how.

The report further explains the motivations behind these investment choices: 42% of investors aim for long-term wealth creation, 32% seek passive income, 20% invest for skill development, and 6% to combat inflation. A significant 81% of surveyed investors have invested in equities, with 45% of young investors under 35 preferring stocks as their primary investment, indicating a shift from traditional savings to direct equity investments fueled by greater financial awareness and access to investment tools.