There is a clear shift in the individual investments in India, with focus shifting towards financial assets compared to physical assets like gold, real estate, according to Karvy India Wealth Report 2018.
Sharing the details of the report here on Thursday, Mr. Abhijit Bhave, CEO, Karvy Private Wealth, said that individual wealth in India grew by 14.02% to reach ₹392 lakh crore in financial year 2018. The overall individual wealth growth rate in 2017 was 11%.
In the financial year 2018, financial assets like fixed deposits, equity, saving deposits, mutual funds, NRI deposits, pension funds, small savings etc., grew to touch ₹236 lakh crore, registering a growth of 17.42%. The physical assets grew to ₹156 lakh crore registering a growth rate of 9.24%.
In the physical assets class, individual gold investments grew by 8.85%, real estate by 10.35% and total wealth held by individuals in gold was ₹74.51 lakh crore and individual wealth in real estate is ₹69.56 lakh crore.
Though demonetisation was intended to shift India into cashless transactions, country will still remain a cash economy for sometime.
The total currency in circulation doubled to over ₹19.3 lakh crore from a low of ₹8.9 lakh crore during the demonetisation period, the report said.
Mr. Abhijit Bhave said the financial assets of individuals amounted to ₹73 lakh crore in 2010 and in eight years they grew to ₹236 lakh crore.
“ Money is moving more into financial assets. In the next five years equity investments will go up and gold investments will come down,” he said.
But compared to global counterparts, India’s allocation of wealth in equity was only 19.02% as against 30.9% globally.
The report gave a forecast that in the next five to seven years, equity investments may be trebled and the sensex may touch 1,00,000 mark by 2025.
The individual wealth in direct equity zoomed to 30.32% to a massive ₹48.97 lakh crore in FY 2018, making it the most preferred financial asset class among individual investors in India overtaking fixed deposits and bonds this year.
Mutual fund
The individual wealth in mutual funds in India in 2018 was at ₹11.68 lakh crore with a growth rate of 34.3% over that of the previous year.
Though financial institutions withdrew $8 billion, the SIPs gave $8 billion, thus indicating the growing preference for mutual fund investments, he pointed out.
India still remains a highly under-insured country with only 5.3 crore people investing in insurance schemes.
