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Saving Habits in India

08 Aug

Indian has strong saving habits which are getting stronger day by day.

Household saving pattern is similar to other Asian economies in the region. We invest in safe savings. We generally invest very less in stock market and avoid and risky investments where as in western economies investments in stock market is high.

47% of the household savings are parked in bank deposits whereas only 4 to 5 % went to equities.

14% is parked in small savings and government deposits.

 Around 24% are invested in insurance, pension funds and provident funds. Majority of the pension funds, insurance and bank funds are essentially controlled by government and provide a safe investment avenue to Indian investors.

Mutual funds have minuscule shares of 3.34 %.

Mutual Funds have grown hugely in India but still people prefer to invest in PF, Bank deposits, pension funds and small savings. The trend remains unchanged.

Probably 15,000 to 20,000 tons of gold is stocked by Indian household. It is really difficult to arrive on a right figure as there is no recorded details are available.

Gold is loved by one and all and hoarded without thinking about return on investment (ROI) which is anyway a sentimental investment which can be used in bad times. Also important here is that most of the gold hoarded is in the form of jewelry which is not pure god

Fixed deposits have always been popular among risk-averse investors. Given the global economic uncertainties and persistent high inflation in India, many individual investors made a shift towards safer investment avenues like fixed deposits FY 11, as against direct equity in FY 10.

Fixed deposits have regained popularity in FY 11 to become the single-largest investment

Class. These instruments are expected to continue to be the largest and preferred investment Class, at least in the next couple of years.

One of the most convenient options for individuals, savings bank deposits offer high liquidity and low risk. Deposits in scheduled banks are quite safe due to RBI regulations.

Savings deposits are popular, constituting a considerable portion of the total deposits of scheduled commercial banks. Savings accounts can be opened in: (a) Scheduled commercial banks; and (b) Scheduled co-operative banks. The total savings bank deposits held by Individuals amount 7.13% of total Individual Wealth.

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Posted by on August 8, 2013 in investment

 

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