If Not Gold, What Are The Top 5 Investment Preferences Of Indians?

The way Indians invest their money is changing, and it’s happening fast. While gold has always been the go-to choice for our ancestors, the contemporary generation is starting to look elsewhere for better returns. The 2024 BankBazaar ‘MoneyMood’ report shows that while a majority of respondents find mutual funds and SIPs as high-performing investment tools, gold trails behind. Let’s understand where Indians are putting their money and why.

The study surveyed 1529 respondents, working as professionals, aged between 22 and 45 years from six metros and 18+ Tier 2 cities.

1) Mutual Funds and SIPs

Let’s start with mutual funds and SIPs (Systematic Investment Plans). These have become the hottest investment choice, with 62 per cent of Indians putting their trust in them this year. That’s a big jump from 57 per cent in 2022 and 54 per cent in 2023.

2022: 57%

2023: 54%

2024: 62%

Why the sudden popularity? Inflation is one reason, it’s eating away at returns from traditional options like fixed deposits. Plus, people are learning more about mutual funds and how they can give better returns over time. Younger investors, especially, are finding SIPs an easy way to dip their toes into the stock market without feeling overwhelmed.

2) Fixed & Recurring Deposits

Fixed deposits (FDs) and recurring deposits (RDs) might seem old-fashioned, but they are still going strong. For risk-averse investors who want to gain interest in their savings without any jitters, FDs have always held solid ground. In 2024 alone, 57 per cent of Indians chose them for their investments. That’s slightly up from 54 per cent in 2022.

2022: 54%

2023: 53%

2024: 57%

Why do people still love FDs? The answer is simple: they’re reliable. You know exactly how much you’ll get back, and there’s no risk involved. With banks offering higher interest rates recently, even some younger investors are giving them a second look.

3) Provident Funds & Postal Schemes

Provident funds and postal schemes are fixed-income investment tools taken up by people for a guaranteed retirement corpus. But their popularity is fading, dropping from 45 per cent in 2022 to 41 per cent this year.

2022: 45%

2023: 43%

2024: 41%

Why the decline? One issue is returns, the report notes that these financial tools have not kept up with rising repo rates. Another problem is liquidity. Unlike mutual funds, you can’t access your money easily if you need it.

Still, they’re not disappearing completely. For retirees and low-income families, these schemes are a lifeline because of their safety and tax benefits.

4) Stock Market

The report finds that fewer people are directly investing in the stock market in 2024. Just 40 per cent of respondents compared to 45 per cent in 2022 are investing in stock markets this year.

2022: 45%

2023: 43%

2024: 40%

“Surprisingly, this study has tracked a falling interest in direct investments in the stock markets, even though its overall share remains robust,” the report states.

The recent crackdown on Futures and Options trading (F&O) and the relative stability of mutual funds may have contributed to the decline.

5) Life Insurance

Life insurance policies, particularly traditional plans like endowments and ULIPs (Unit Linked Insurance Plans), are taking a hit. Only 37 per cent of Indians are investing in these products now, down from 46 per cent in 2022.

2022: 46%

2023: 43%

2024: 37%

Why? People are realising that life insurance is not the best way to grow their money. Instead, they are opting for term insurance for protection and putting their investment money into mutual funds or other products that offer better returns.

“Better education around financial products, need for higher returns, and a higher risk appetite especially for long-term investments is causing people to move away from endowment plans and ULIPs to more user-friendly products such as MFs,” the report states.

6) Gold

Though not in the top five, gold still holds its ground as a popular investment option for Indians. Down only 3 per cent from 2022 (33%), 30 per cent of respondents still invest in gold in 2024.

2022: 33%

2023: 27%

2024: 30%

“Commodities had a great year. While global trade tensions persisted and inflation remained volatile, investors loaded up on gold. After a brief dip last year, gold and silver had more takers this year,” the report states.

7) Cryptocurrency

Over the last three years, cryptocurrency has seen a steep decline as a preferred investment choice for many respondents. From 32 per cent in 2022, only 12 per cent of surveyed investors are investing in crypto as of 2024.

2022: 32%

2023: 23%

2024: 12%

Why this decline? High taxation, lack of regulation, extreme volatility, and Infosecurity problems have squeezed out most interest in this segment. “However, recent geopolitical shifts and declining interest rates should revive interest, as the latest rally suggests,” the report notes.

The Big Picture

The way Indians invest is evolving. The gap favouring SIPs over FDs among salaried Indians widened to 5 per cent, the highest on record.

More and more people are choosing mutual funds and SIPs as their desirable investment options while fixed deposits closely follow at second place. However, Gold - the safe haven asset, continues to hold a place in investor’s portfolio.

The study highlights that Indians are diversifying their portfolios while blending the old with the new to secure their financial futures.