The Great Indian Rope Trick.
A cute yet annoying thing we’ve had to hear whenever anyone from across the pond spoke about India in the same breath as “things back home”.
You’d think they were talking about the 1900s. Yet, here we are in 2015, doing exactly that. The Great Indian Rope Trick.
Only, we’re doing the tight rope walk. When it comes to our investments, that is.
Indians have been getting riskier and hungrier when it comes to financial planning and investments lately. A nation whose love for gold and land is legendary, Indians are traditionally considered as savers. From those olden days of savings in gold, land and FDs, we have come a long way in picking, choosing and hunting for new, complex and risky investment channels.
Let us unwind the tale of the changing outlook of Indians in their savings and financial planning.
The Late 80’s
The Indian economy was like a sleeping giant during this period. The traditional wealth in the country and the large NRI investments flowing in, were all tapped in FDs and real estates. Even though financial awareness was slowly gaining among the Indians, the lethargic public sector banks and Life Insurance Corporation were the only investment options available.
People were more contempt with their incomes however little it was, and was unworried about inflation and its possible impact. They saved for a rainy day rather than planning for their financial future. The common man invested in gold in the form of jewelry, following the age old family tradition.
The Early 90’s
The early 90’s slowly witnessed the liberalization of Indian economy. The rise of the new breed of IT professionals, opening up of a global economy, the dawning of a private era in banking and the new range of services offered by the aggressive private banks, all these awakened the sleepy banking segment in India.
These resulted in a sudden fresh lease of life in the Indian financial markets. The private players who were emerging in the banking and financial services market made way for a path breaking reform in the Indian banking sector.
Private Banks started offering a host of new investment options and services for the investors. This changed the perspective of Indians to investments, banking and financial markets.
A sweeping change happened in the investment segment during this period. The terms ‘financial planning’, ‘money management’, ‘investment planning’ all started blowing into the minds of Indians.
The stock market boom in 2007 and the mushrooming of private insurance players, all these thrilled many existing and newbie investors. The time also witnessed the entry of a new breed of financial entrepreneurs as wealth managers and financial advisors. Insurance advisors swelled the industry as the new band of private insurance companies went aggressive for a fair market share. They reaped handsome money too by selling ULIPs.
ULIP as a product dominated the investment scenario, along with increasing demand for online trading, mutual funds and others. The Indians, who were traditionally known as risk averse, started getting glued to risks through equity investments.
The economic depression followed this in 2008-09, the number of frauds during the booming times; all these taught the Indians to tread with care. We are now more cautious in making our money moves. The financial industry is now under strict regulations under RBI, IRDA and other subsidiaries. Consumer rights are protected and safeguarded than ever.
The influence of technology in financial planning is a welcoming move of the present era. From mobile apps for investing, to picking and choosing products online, we are now in a tech era.
Financial companies are now more accountable to investors. A more professional approach in the financial advisory space has started with a new breed of financial entrepreneurs who come equipped with premier degrees to offer advice on financial planning. Investors are now aware of the quality of financial advice they get.
Equally, on the other hand, Indians are spoilt for choices of investment with mushrooming of products in all segments – whether it is MFs, ETFs, bonds, ULIPs, pension plans, term insurance or any other. Technology has made it easy for buyers do their own homework before choosing with their Smartphones.
There are a host of competitive professional financial investment advisory companies to help you in making choices. With online facilitators promoting investment products of any company, it is also easy now to make investments. The diversifications of investment vehicles using technology enhanced analytics and research are also helping investors to reap rich dividends.
Indians today are far more financially literate than ever before, especially with the emergence of the internet as a hub of informed choices. Today every Indian with a decent salary or earnings has a financial plan to safe guard his financial future. From investment to retirement planning to insurance or investment in precious metals or stock markets, we are at par with global investors in terms of financial literacy.
Unlike in the past where gold was considered to be the safest investment bet and most investments meant having a bank fixed deposit, Indians have come a long way today.
They’ve let themselves out on a long leash. Financially. Boo-yah!