2023 is the second year in a row where mutual funds have overtaken fixed deposits (FDs) as the preferred investment.
The study surveyed 1675 respondents from six metros and 18+ Tier 2 cities of India. This year’s study covers working professionals aged between 22 and 45 years.
Gender split
The third most popular investment, fixed/recurring deposits, was chosen by 53% of women compared to 50% of men. The gap between men and women investing in stocks has widened marginally, from 7% last year to 8% in 2023.
“Revised laws calling for 30% tax on cryptocurrency have certainly dulled their charm. This year, people largely stuck to conventional investments such as fixed deposits, stocks, and mutual funds,” said Adhil Shetty, CEO of Bankbazaar.
Besides inflation, there are other economic factors which have led to stagnation in savings. The top reasons for saving are emergencies (61%), children and inheritance (58%), and lifestyle upgrades (45%).
Increased work from home meant older women were able to reduce other expenses, including additional childcare, resulting in increased savings, noted the report. As WFH recedes, growth in savings has also crashed savings this year. Following the pandemic, which saw medical expenses soar for countless people, saving for emergencies such as hospitalisation was the top reason for savings across all age cohorts.
Retirement planning has taken a major hit this year as the percentage of savings towards retirement has shrunk from 45% in 2022 to 38% in 2023.
The biggest losers here were women, who have rolled back on retirement for other savings. Only 34.3% of women are saving and investing towards retirement compared to 48.45% of women last year. For men, this number is more or less constant, as 40.1% of men continue to prioritise retirement planning compared to 41.86% last year. The percentage of women without a retirement corpus has worryingly risen from 32% in 2022 to 43% in 2023. In the case of men, there has been a marginal drop in this figure, from 46% in 2022 to 45% in 2023.
Data analysed by Bankbazaar indicates that serious retirement savings starts typically in the late 20s to early 30s. In 2023, close to 9% of respondents said they are working towards a corpus of Rs 50-Rs75 lakh, closely followed by another 8% who are working towards a retirement corpus of Rs 75 lakh-Rs 1 crore.
“This year’s data is yet another stark reminder of low insurance penetration in India. Six per cent had no insurance cover at all and only 16% had health insurance cover,” said the survey.