Moneycontrol PRO
Upcoming Event:Attend Algo Convention Live, 2 Days & 12+ Speakers at best offer Rs.999/-, exclusive for Moneycontrol Pro subscribers. Register now!

COVID effect | 'Equity to remain large part of retail customer’s portfolio, more than ever'

Overall, I believe the pandemic, as ugly and as detrimental as it has been, has taught a lot of lessons to the new investors, says 5paisa.com CEO Prakarsh Gagdani, CEO,

May 31, 2021 / 02:09 PM IST

Prakarsh Gagdani, CEO, 5paisa.com

With the coronavirus outbreak, we have seen a major shift in people’s investment patterns. The pandemic has been an inflection point for the discount broking industry that witnessed a remarkable increase in the number of new account openings.

What's astounding is that most of these customers are from areas always underrated by the investment market. We always knew that there was a lot of unexplored investment potential in small towns and the pandemic made the world take not of it.

Most of the new investors are millennials who have now started moving towards dual or multiple income sources and find the stock market to be a great investment avenue. In fact, we have observed that the COVID-led crises have pushed the Zillenials as well into investing.

I have also observed that people are becoming more conscious and aware of their financial behaviour and are now focusing on creating a cushioning amount that would help them get through the uncertainties like the one we are facing now.

Close

This new breed of investors is far smarter than the earlier ones, when it comes to the mindset and attitude towards the market. They are no more looking at the market as a quick money-minting business and are willing to stay invested. And this makes me really very optimistic about the growth in the numbers of people venturing into stock-market investments.

People are now realising the importance of having liquid money and are becoming more cautious with their spending and investment decisions to be ready for any eventuality.

I came across a 'Consumer Spending Sentiment Index Report' by InterMiles, which suggested that since the onset of the pandemic, 90 percent of Indian consumers have witnessed a change in personal spending behaviour. Nearly 70 percent of Indians were emphasising on investments and savings, while non-essential spending saw a steep drop, it said.

The new investors seem to be willing to diversify their portfolios into non-traditional investment options. They have realized that with the return on investment (ROI) on fixed deposit (FD) reaching as low as 4.5 percent and that from the mutual fund (MF) coming to 8.5 percent in the previous year, if they want to look at a high return offering option, they will need to try their hands at equity and related products. And they are willing to do so.

Apart from the whole financial fiasco caused due to the pandemic, I feel the word of mouth could have been a factor driving the whole shift in the attitude.

Overall, I believe the pandemic, as ugly and as detrimental as it has been, has taught a lot of lessons to the new investors. It has been an eye-opener to people and has been instrumental in bringing in a remarkable shift in the whole approach, thus bringing in new investors.

I believe equity will remain a large part of the portfolio of the average retail customer than it was ever before. It is no more going to be just cash or fixed deposit. Hopefully, that brings sustained higher levels of wealth creation for the average investors in the long term. The pandemic has also taught us how financial education goes a long way in helping the personal finance decisions of a large section of society.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes

Prakarsh Gagdani
first published: May 31, 2021 02:08 pm
Sections
ISO 27001 - BSI Assurance Mark