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Ninety-three per cent of retail investors show interest in investment in new-age financial products such as REITs, small cases, NFTs (non-fungible tokens), and digital gold. This is according to a recent report by smallcase and Zinnov (a global management consulting) titled, ‘Rise of the Indian Retail Investor’.

The report further highlights that 50% of retail investors started investing in stocks less than 3 years ago and 38% are interested in actively investing in new IPOs. More than 70% of retail investors save up to 30% of their monthly income for investments with a systematic investment plan (SIP) as the most preferred route of investing with 55% of investors opting for this option.

Retail investors show interest in REITs, small cases, NFTs, and digital gold.
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Retail investors show interest in REITs, small cases, NFTs, and digital gold.

Investment in REITs gained significant momentum with investors’ portfolio constituency to the asset class going up to 2% since the first REIT listing in 2019. Direct equity allocation has touched 8.1% in 2022 from 7.3% in 2017. Interestingly, digital formats of traditional avenues such as gold are also gaining traction among investors, as per the survey.

ETFs also have seen a dramatic rise in folio numbers and assets under management (AUM) grew by 58% YoY since 2018. Even though traditional investment products like fixed deposits constitute the biggest slice of the pie at 29.2%, their share has declined since 2017 as is the case with Public Provident Funds (PPFs), primarily due to the stagnant interest rates.

Commenting on the changing preferences of Indian retail investors, Vasanth Kamath, founder and CEO, smallcase, said, “Savvy investors with varied savings are designing their portfolio using new-age investment avenues. With the adoption of the internet, increasing mobile penetration and financial literacy, the Indian investor is not just shifting larger financial transactions to digital mediums but also being thoughtful on portfolio construction, both from risk profile and investment horizon perspectives. Regulatory progress has also democratized investing."

Atit Danak, partner & head - CoNXT Practice, Zinnov, said, “Increased financial literacy and dismal returns from traditional savings instruments have propelled the everyday Indian investor to explore newer channels of investment, making way for Indian equity markets to play a pivotal role in the near future. With less than 2% of Indians investing in mutual funds, it poses a significant opportunity to financial companies to make them attractive for the average retail investor."

Further, the report also points to the source of financial information for retail investors. Seventy-three per cent of them are informed about financial products with family and peers being their primary source of information, while 52% turn to financial influencers as a key avenue to learn about wealth management. Interestingly, 61% of retail investors prefer not to pay for financial advice. Those who are ready to pay fall between 45-60 years of age and have more than 20% in monthly savings.

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