1. Why do the people from the income group below 5 lakh invest more in MF?
The Indian thought process is changing. People have understood the importance of investments over savings during pandemics. The patience to double the savings in 5 years increased to almost 9+ years due to inflation is one of the major reasons why the income group below 5 lakhs has shifted towards investments in MF. During the last 10 years, we have seen that the Mutual Fund industry has even given a 700% return. Features like Liquidity brought flexibility, diversification reduces volatility, and professional expertise has been a helping hand for a novice investor. Flexibility to invest in Systematic Investment which is attractive for the salaried individual. The easiness to buy because of the flooded applications on Android and IOS. The goal-based variety of investment schemes with full-fledged Safety and Transparency under the SEBI guidelines. The cherry on the cake is the Tax Saving opportunities.
2. Why do people think the tendency to invest in MF goes down with increasing income?
No, we will not agree with the statement completely. We can’t deny the fact that our industry has a lot of avenues and opportunities for investments. Investors tend to opt for many other financial products such as Alternative Investments Funds, Fixed Deposits, Stock Markets, T-Bonds, Non-Convertible Bonds, Pre-listed IPOs, Unlisted shares, etc. This happens when the income increases but that doesn’t mean that the investor tends to shift completely. The existing SIPs continue and always have shown a hike in the investments in different folios ranging from retirement planning to tax saving schemes etc.
3. What is the preferred mode of investment in the high-income groups? Data show more than 70% of MF investment comes from IG below 5lakh
Here we can say an Indian Investor has been categorized on the basis of traditional and modern financial avenues traded in the market. The traditional avenues include Fixed Deposits, Post-office savings schemes, Insurance, Debt Instruments, etc. whereas the modern avenues include the Stock market, Alternative Investment Funds, Portfolio Management, Pre-listed IPOs Unlisted shares, etc. both the categories of investors have their pre-defined thoughts for parking their finances. But the universal fact which can’t be denied is that SIPs and one-time investments in Mutual Funds will always be in fashion for high-income groups as well.