From Saving To Investing: How Indian Households Are Building Wealth

Indian households are gradually changing the way they think about money. The traditional preference for safety, liquidity and fixed-income savings is increasingly giving way to a greater focus on long-term wealth creation, helped by rising incomes, wider financial awareness and easier access to capital markets.

The shift is visible in the composition of household wealth. Investable assets stood at nearly $5.20 trillion in FY25, accounting for around 34 per cent of total household assets, up from 28 per cent in FY15, according to EY India’s latest report, Wealth Inclusion in India: Expanding Investor Participation Beyond Metro India.

The change is also reflected in where households are putting their money. Over the past five years, investors have increasingly moved beyond traditional fixed deposits (FDs) towards market-linked savings and investment products. Mutual funds and listed shares are among the biggest beneficiaries of this shift.

Individual investors now make up around 64 per cent of the mutual fund industry’s total assets under management (AUM). Their mutual fund holdings had grown to nearly $600 billion by June 2026, according to the report. Retail participation in the stock market has also increased, with individuals now owning 9.10 per cent of companies listed on the NSE.

When direct equity holdings and mutual fund investments are combined, individuals now account for about 18.70 per cent of the Indian equity market. Their aggregate ownership has also moved ahead of foreign portfolio investors (FPIs), pointing to the growing importance of domestic household money in Indian capital markets.

Access Is No Longer The Biggest Hurdle

The scale of retail participation has changed dramatically in recent years. Combined direct and indirect household ownership of equities reached about $800 billion by March 2026, growing at an annualised rate of nearly 30 per cent since March 2020.

The change is also visible in the way Indians are entering the stock market. The number of demat accounts with NSDL and CDSL has grown about 5.50 times since the pandemic and has now crossed 230 million. The NSE, meanwhile, has more than 130 million unique registered investors.

A big part of this growth has come from the phone in people’s hands. Investment apps, discount brokers and online wealth platforms have made it possible to open an account and start investing without much paperwork or the need to deal with a traditional intermediary. You don’t necessarily have to live in Mumbai, Delhi or Bengaluru anymore. Someone sitting in a smaller town can access the same markets with a smartphone and an internet connection.

And this may only be the beginning. EY estimates that individual holdings in equities could grow 3-4 times over the next decade, reaching around $2.50 trillion-3 trillion. More than 120 million new investors could enter the market during this period. Younger investors, particularly Gen Z and millennials, are likely to be an important part of this next wave as digital investing becomes a more familiar part of managing money.

Even after this rapid growth, India’s equity and mutual fund markets remain relatively small compared to some other major economies. 

Together, they account for only around 15-20 per cent of India’s gross domestic product (GDP), compared with 50-60 per cent in the US and 40-45 per cent in Brazil.

That difference points to how much further the shift could go. For many Indian households, a large part of their savings is still kept in traditional avenues. As incomes rise and investing becomes easier to access, some of that money could gradually find its way into mutual funds and equities.

From More Products To Better Decisions

Greater participation, however, does not automatically translate into better investment outcomes.

Retail investors today have access to a much wider range of products than earlier – from mutual funds and direct equities to derivatives, thematic strategies and other market-linked investments. The challenge is increasingly about choosing the right product for a particular financial goal rather than simply finding an investment opportunity.

This becomes more important as regulators try to curb excessive speculation in the markets. Recent steps by the Securities and Exchange Board of India (Sebi), including tighter position limits, closer monitoring and stricter norms for index derivatives, are aimed at making participation in this segment more measured.

For households, the bigger change may be in how they think about investing. Instead of looking for the next investment opportunity, the focus could increasingly be on putting together a portfolio that matches a specific goal, the amount of risk they can take and how long they can stay invested.

Strong stock market returns and the steady flow of initial public offerings (IPOs) have also kept investors interested. The Nifty 500 has delivered annualised returns of roughly 15-17 per cent over the past decade, while Indian companies have raised more than $80 billion through IPOs in the last six years.

That kind of performance can be tempting, particularly for investors who are new to the market. But it is worth remembering that strong returns from the past may not be repeated. And with so many products now competing for an investor’s attention, knowing where to invest can sometimes be harder than getting started in the first place.

The next stage of India’s investment story may, therefore, depend less on improving access and more on improving decision-making. As households move from saving primarily for financial security to investing for long-term prosperity, financial education, suitability-based advice, goal-oriented investing and sensible portfolio construction could become increasingly important.

For the industry, the opportunity may not simply be to bring more products to more investors, but to help households make those investment choices with greater clarity and discipline.