Post the shock of the pandemic, people realised that they needed another source of income apart from their regular day jobs. While small investment schemes like PPF, savings accounts, and fixed deposits were still there, they were not giving the returns of mutual funds investment plans.
The attraction towards mutual funds grew only after the pandemic as statistics from RBI shows. In today’s blog, we will examine the various details surrounding this trend and what it means for you as an investor. Take a look!
Most households are investing in mutual funds via the medium of SIP. SIP or Systematic Investment Plan is a leading investment medium where a person can invest in mutual fund units through either monthly, quarterly, or weekly investments.
Investments in mutual funds by households reached Rs. 1.8 trillion during the financial year 2022-2023. The major contributing factor was the investment by people in SIPs.
Investment in mutual funds investment plans in the financial year 2021 was 1.3% only. Then the pandemic happened and it sent people racing to invest in mutual funds where they would receive more returns on their investment than the case with other types of investment plans.
The financial year 2023 saw a 6.1% share of the total household savings being poured into mutual funds whereas 2 years ago it was only 1.3%.
Data from SEBI (Securities and Exchange Board of India) shows that most of the investors’ money went to equity schemes. Equity scheme inflows are at a high as was mentioned in our previous blog.
Mutual funds have invested a whopping Rs. 1.73 trillion in the equity market which is equal to 97% of the total investment in mutual funds.
The statistics are simple. They show a preference for equity mutual funds among the various Indian households.
In conclusion, the shock of the pandemic led to a significant shift in the investment landscape for Indian households. People are looking to invest and are taking risks in their stride.
With traditional options like PPF and fixed deposits yielding lower returns, mutual funds investment plans, particularly through SIPs, emerged as the preferred choice. The data from RBI and SEBI clearly indicate a growing appetite for equity mutual funds, with a substantial portion of household savings flowing into this asset class.
As we navigate the evolving financial landscape, it’s crucial for investors to continue educating themselves about mutual fund options, risk factors, and long-term financial goals to make informed and prudent investment decisions in this new era of financial resilience.
