When Stephen Moreira received a bonus from the IT company he was working for, he contemplated the idea of putting down a deposit on the Royal Enfield Classic 500 that he so loved. He did and today he rides one. That was what he did with money that was disposable. Like him there are millions who do different things with their disposable income. Double income, no kid families earn a pretty packet and they have money to save and money they can blow up anything they wish. For many people, financial security in the future is the prime focus and for those who live in a rented house, it is about owning one.
Vrushali Parsekar a financial consultant who helps people towards a secure future said “The younger generation don’t mind investing in high risk mutual funds. You pay a small sum every month and in twenty years you come away with a couple of crore. For the short term, people go in for fixed deposits. 20% of my clients are youngsters.”
Another financial consultant who did not want to be named said the older generation thought more rationally with money. He said “Bonuses or sales commissions are kept aside and invested in financial instruments. Not the youngsters. They seem keen on spending on that flashy watch or the latest car that has come into the market.” He added that consumerism had taken hold of the youth. Hey seemed to spend their entire salary on brands sometimes which was disconcerting. The tradition of saving that marked Indian culture was he claimed would not continue into the next generation.
If Goans parked their disposable funds in financial products, what were these products. Generally according to market surveys about 78% of Indians are comfortable calling in a broker to place their trades, while only 22 percent are savvy enough to use the Internet to invest. It has been gauged that the investing habits and outlook of retail investors, also revealed that rural and small town India still prefers fixed deposits.
A startling find, however, was the fact that less than 1 percent of the total value has been invested in these instruments as a result of poor awareness. Despite a steadily growing knowledge and investor base, the financial risk appetite of most Indian investors remains fairly low, as indicated by a significantly higher preference for secure financial products such as bank deposits. Bank deposits followed by life insurance, gold and post office savings were very important. Buying a new house as an investment ranked pretty low for those in the salary segment.
Investments in equities and mutual funds amount to less than 1% of the total value because of very limited awareness (to the tune of only 1.4%) of such instruments. Rural investors, like their urban counterparts, prefer fixed income products too since banking facilities are now available across the breadth and depth of the country.
For many middle aged consumers, financial security is important and the absence of risk while investing is of the utmost importance. A financial consultant in Mapusa said “It is not unusual for people to have set ideas and are just not willing to listen to you. I know of a case where a lady decided to keep Rs 51 lakh in a fixed deposit earning very poor interest. She said she would know her money was there and could keep an eye on it, ideas which make no sense.”
This consultant who has been in the business for over two decades said it was difficult to convince people in Goa that there were financial products that would grow their money and make them wealthy. A very risk averse people, the average Goan, he said did not mind a lower return on investment as long as it was safe, which then explains the love for gold.
Vikram Verlekar of Ulhas jewelers said “Goans buy gold to wear but yes there is a distinct segment that buys it as an investment too. But when you think about it anyone who buys gold keeps it and it is in a way an investment. 70% buy it to wear it and 30% to invest.” Gold he said could be seen which was important for a people who are generally risk averse. The metal also had an emotional connection with the people and more importantly, its value always seemed to increase.
Devesh V, a Goan residing in Mumbai but now contemplating a return to his roots said “I make advertising films and yes there are times when I have cash in the drawer, I spend it on watches, new lenses for my camera or even invest in high risk, high return financial products but otherwise, I like to enjoy my money. I will earn more money and save in the future. There is time.”
It is a generational thing. The older generation looks for financially safe products and the younger generation keen on enjoying the money they make. Perhaps in a generation we will know how it all pans out.
