While the initial half of 2020 was riddled with economic uncertainty, there was a outstanding raise in the quantity of Demat accounts getting opened in the nation.
Industry professionals say 3 components contributed to these developments- Firstly, the coronavirus crisis made an chance for investors to invest in very good high quality stocks at a less expensive cost. Secondly, a huge section of workplace-goers working from household was capable to save on a number of fronts, had more time to analyse providers and invest for the lengthy term. Thirdly, the ease of investment apps and digital platforms gave the more push.
Harsh Jain, Co-founder and COO, Groww, says, “Investment apps and digital platforms like Groww made investing easier, faster, and transparent for the DIY (do-it-yourself) generation, removing hurdles with paperless onboarding and low brokerage.”
He adds, “2020 gave ample opportunities to millennials to explore the wealth creation potential of equities and also made them aware of the risk-reward trade-offs. As investors warm up to the idea of equities and investing becomes more democratic, retail participation is expected to increase exponentially in 2021 as well.”
According to reports and investment trends observed by Groww in 2020, investors below the age of 30 make up more than 2/3rd of the customers with GenZ’ers (18-24) comprising 33 per cent and young Millenials (24-30) getting 37 per cent of the investor base.
Jain says, “There has been a marked shift in the average age of investments. While earlier generations started investing well into their mid-thirties, millennials are starting to invest as early as the mid to early twenties.”
According to the information and report by Groww, top rated tier 2 cities that have the maximum concentration of investors consist of Lucknow, Ahmedabad, Patna, Jaipur and Bhubaneswar, whereas, Pune, New Delhi, Mumbai, Bengaluru, Hyderabad, and Kolkata contribute to only 45 per cent of their investor base.
The report also stated, from Jan to March 70 per cent customers invested by way of SIP, this quantity enhanced to 77 per cent in the course of the lockdown period, specifically about the time markets have been volatile – this shows a higher awareness amongst the user base about SIP being the very best investment mode in the course of volatile markets, owing to the advantage of Rupee expense averaging it provides.
Out of the total Asset below management on Groww, ahead of the lockdown 78 per cent was allocated to equities, 19 per cent to debt and the rest to hybrid. The numbers shifted slightly post March 31st – with 75 per cent to equity and 22 per cent to debt. The information states there was also a slight raise in the sectoral/thematic funds just after March 31, with defensive sectors such as Pharma, FMCG, and so on. garnering more interest.
Jain, says, “While users were leveraging market volatility to accumulate more units in equity mutual funds, they had also been investing in debt fund categories to cushion against uncertainties. Most popular investment class in debt was liquid funds – 33 per cent of the assets allocated to the debt category is constituted by Liquid Funds currently.”
According to the report, ultra-quick duration comes at a close second with 25 per cent. Experts say higher withdrawal flexibility, security as effectively as improved capital appreciation have produced these funds a well-known investment class to park excess money and prepare for emergencies.
Similarly, other merchandise that have gained favour amongst millennials have been IPOs and Exchange Traded Funds (ETFs). Based on the series of new item launches like Stocks, IPO, ETF’s, Digital Gold and so on., the typical ticket size of a transaction has holistically gone up by 70 per cent on the Groww platform. The information states, the typical SIP ticket size has gone up by 30 per cent.
Jain, says, “A large section of the urban class is saving a lot more money than before as spendings on travel, restaurants, cinema, luxury purchases, etc. have gone down. The pandemic induced lockdowns and many organisations in the private sector adopting work-from-home has given users more time to research deeply about investing in stocks and mutual funds.”