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Indians invest 77% in real estate, 11% in Gold: Report


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According to a report by BofA Securities, the financial savings of Indian households have undergone a significant shift in recent years. The report highlights that traditional bank deposits, including non-bank deposits, have witnessed a decline in share, while capital markets have seen a slight increase. In FY2001, bank deposits accounted for 39% of total financial savings, whereas capital markets constituted only 4%. However, in FY2023, the figures stand at 37% and 7% respectively.

The report attributes this change to improved financial literacy among households. It points out that savings invested in life insurance, provident funds, and pension funds have steadily risen from 34% of the total in FY2001 to 40% in FY2023.

RBI’s data on the flow of financial assets and liabilities of households reveals that savings in the form of currency have decreased from 12% in FY22 to 7% in FY23. This shift has been redirected towards bank deposits, which have increased from 22% to 35% during the same period.

As of FY22, household savings in financial assets amounted to Rs 28 trillion, double the Rs 14 trillion recorded in FY12.

The report also highlights the asset allocation of Indian households. On average, 77% of total assets are held in real estate, 7% in durable goods (such as vehicles, livestock, and machinery), and 11% in gold.

The share of physical savings in total household savings has gradually declined from 69% in FY2012 to 49% in FY21. However, it rose to 61% in FY22, and the report expects it to increase further in FY23.

Considering these trends, the report anticipates that total household savings in FY23 will surpass the levels seen in FY22, primarily due to an increase in physical savings.

The household sector plays a significant role in the Indian economy by supplying financial resources through savings, contributing 70% to total gross domestic savings.

Household savings are broadly categorized into financial and physical assets, accounting for 56% and 44% of total household savings, respectively. Bank and non-bank deposits constitute 37% of financial savings, while shares and debentures account for only about 8%.

Real estate holds the largest share in physical savings at 77%, and 11% of total physical savings is in the form of gold.

In FY2001, household savings contributed 90% to total gross domestic savings, with physical savings accounting for 45%. However, the share of physical savings has gradually decreased over the years.

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