SIP favoured by younger Indians: Report

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Young Indians have taken to investing in systematic investment plan (SIP) on back of rising incomes, increased financial literacy and proficiency in using digital technology, says a report.

The report by WhiteOak Capital Mutual Fund said GenZs and Millennials account for 56 per cent of its investors. Millennials, also known as Gen Y, are typically defined as those born between 1981 and 1996. Generation Z, or GenZ, are those born between 1997 and 2012.

WhiteOak Capital Mutual Fund has with 3.33 lakh investors and manages assets worth Rs 8,400 crore.

In a separate India’s Pulse Personal Finance survey conducted by Money9, about 10% of Indian households invested in mutual funds.

The data shared by the fund house showed that 28 per cent each of its 3.33 lakh investors belong to the 18-35 years and 35-45 years age groups.

The majority of its investors — 51 per cent — came through digital channels at the age of 18-35 years. “As millennials and GenZ are digital natives, it is quite natural for them to prefer technologically centric financial service providers,” Prateek Pant, Chief Business Officer of WhiteOak Capital, said.

He further said features such as reasonable returns, professional fund management, lesser investment threshold, wide array of investment schemes and easy withdrawal facility are drawing young investors to the SIP route.

The analysis showed that the average investment or ticket size for the investors belonging to the 18-35 years age group is lower compared to older investors.     “This could be due to the fact that the very young investor segment may be investing out of their pocket money or through income generated via part-time jobs and internships. Due to lower pay-checks, their investment amounts are also lower,” Pant said.

Most of them in the age group of 18-35 years are in the early to mid-stages of their careers and hence are in the wealth building mode. Even though their earning capacity is lower than the older age cohorts, it is likely to go up as they advance in their careers.  “Even though the investment amounts are lower, if they continue to stay invested for longer time horizons and invest regularly through facilities like SIPs, the power of compounding will work wonders for them in creating sizable wealth,” he said.

Overall, Indian mutual funds currently have about 7.92 crore SIP accounts through which investors regularly invest in mutual fund schemes. (With inputs from PTI)