A trend is on the rise in the personal investments space in the country, especially with regard to capital market-linked products. The emergence of several wealthtech platforms has provided young investors across the country an opportunity to start their investing journey much earlier compared to previous generations. Until a few years back, not many people used to invest in the capital market products due to lack of access or awareness and those who did, mostly started investing in their 30s or maybe a few in their late 20s.
However, with easy access to investment products via wealthtech platforms, we now see a large number of youngsters in their early and mid-20s investing in products such as mutual funds, stocks and bonds.
How does this benefit young investors and the industry as a whole?
Firstly, an early start provides a great opportunity for young investors to learn about a variety of investment products and nuances of investing. While reading about investing or listening to investment experts can provide a lot of useful insights, there’s no substitute for having real investing experience as investing in market linked products demands managing one’s emotions across market cycles and following discipline amidst continuous noise in the market.
Learning practical investment lessons at an early age can provide these young investors a lot more confidence to make significant allocation to capital market products over time. Secondly, investing at a young age offers them an opportunity to compound their wealth over a long period of time – one of the most important tenets of successful investing.
Besides, wealthtech platforms have democratized access to investment products with investors across the length and breadth of the country now being able to invest via such wealthtech platforms. Participation of a large number of investors in the capital market can go a long way in contributing to the long-term economic growth of the country as it ensures efficient channeling of capital resources to deserving businesses and sectors of the economy.
The road ahead
While the advent of wealthtech platforms offers several benefits to investors, the investment industry, and the economy as a whole, the onus is on these platforms and other industry stakeholders to ensure that these young investors do not end up making major investing mistakes that can lead to poor investing experience in their initial years of investing. As such, it would be critical for wealthtech platforms to go beyond transaction enablement and focus on providing necessary tools, features, and education that can aid in investment decision-making. The focus needs to be on adding value to the investing journey of these investors so that they can stay on course to create wealth over time.
(The writer, Nilesh D Naik, is the Head of Investment Products, Share.Market (PhonePe Wealth))