As per BSE, 161 million is the total number of registered investors as of February 9, 2024, and per the Association of Mutual Funds in India the total number of unique mutual fund investors crossed 40 million in September 2024. The total number of registered investors has nearly tripled from the COVID-19 pandemic. We can see how youths are indulging in trading and the survey proves that. Almost 20 percent of households are considering the Stock market as a way to channel their savings.
But let’s go back to a few years when the Stock Market was considered the riskiest investment. Presumption prevailed that only institutional investors could handle the stock market and benefit from it. Other individuals and organizations were dependent on financial institutions for investing their money in the realm. For normal individuals like me, household investment was considered synonymous with FDs and PPFs. It was a sin to consider some other alternatives.
So what changed? The first paragraph conveys how retail investors have taken the responsibility of investing in their own hands in mutual funds, stocks, and bonds. More than 5.4 million investors were added in January 2024 alone as per NSE.
So it’s high time we discuss what changed this.
The key factors responsible for the above changes are Financial literacy growth, Digital India, Low Interest Rates, and Stock Market success stories.
Financial Literacy Growth
It is the ability to effectively manage a variety of financial decisions such as financial management, budgeting, and investing. The recent advances in technology and media coverage are the factors for the increase in financial literacy in India along with the initiatives taken by the government.
Digital India
Trading platforms, apps, and websites enabled by the digital India initiative by the government are easily accessible by people and have made the investment so readily available. With a single touch on the screen, we can buy any instrument. The number of transactions concerning digital payments has grown 5 times from 10.04 billion in 2016-2017 to 55.54 billion in 2020-2021.
Low Interest Rate
Low returns from traditional savings instruments, such as fixed deposits and savings accounts are convincing investors to switch to the stock market for higher returns.
Stock Market Success Stories
Everyone wants to be the modern-day Harshad Mehta and Rakesh Jhunjhunwala, all thanks to the marvelous return of the stock market. The Market has been bullish and giving tremendous returns. The average stock market return is about 10 % per year for nearly the last century as per S&P 500 INDEX. NIFTY 50 has an average annual return of 14.2% in the last 15 years. When the market is so attractive, why will someone miss it ?
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