Younger investors turn to high-risk, high-reward cryptocurrency
More than half of investors in cryptocurrency (55%) in India are Gen Zs – people born between 1996 and 2010 – according to a leading investment specialist.
Additionally, 41% of investments in stocks and 25% of investments in non-fungible tokens (NFTs) are made by Gen Zs.
Chartered Financial Analyst (CFA) Swati Saxena, CEO of 4Thoughts Finance, said the figures indicate a strong inclination towards high-risk, high-reward investments among this generation.
She said: “Their approach is not just about chasing quick gains. By diversifying their portfolios, Gen Zs spread their risk and potentially increase their returns, making the most of today’s fast-changing financial landscape.”
Saxena said Gen Z is investing differently to millennials – people born between 1981 and 1996 – in several ways. “Unlike previous generations, who leaned more towards mutual funds and indices, Gen Z is more focused on individual stocks, thanks to online platforms and apps that make informed decision-making easier,” she said.
“With fewer financial liabilities, Gen Z is focused on building ‘wealth-for-life’ milestones such as starting businesses, funding higher education and achieving financial independence earlier in life. Their investments reflect their values, favouring flexibility, liquidity and growth potential.
“Gen Zs are willing to take risks if it means a chance for swift gains. However, they are not reckless gamblers. They understand the dangers of letting emotions like greed and fear drive their decisions. Instead, they take calculated risks to achieve their financial goals, blending bold choices with careful planning,” said Saxena.
Mutual funds are the most common investment among Gen Z, with 54% of first-time mutual fund investors belonging to this generation, according to a study by Computer Age Management Services (CAMS).
It said many people from this generation also explore alternatives like cryptocurrencies, NFTs and other digital assets, looking for opportunities where they can gain either in the short or long term.
Though Gen Z is known for exploring new-age investments, they haven’t completely turned away from traditional instruments like Public Provident Funds (PPFs) and Fixed Deposits (FDs).
“These fixed-income sources provide them with peace of mind and a stable income stream, allowing them to plan for long-term goals such as higher education, starting a business, or even starting a family. However, real estate is often avoided due to high entry costs, making it less attractive compared to other investment options,” added Saxena.
She said that AI is a particularly attractive area of investment for Gen Z, with other popular areas including sustainability – sectors like electric vehicles (EVs), renewable energy (solar, wind, hydro) and biotechnology are growing rapidly.
“These investments not only support the movement towards a cleaner and greener planet but also promise monetary benefits in the long run. However, investing in some of these sectors may require deeper pockets and patience before returns start flowing in,” she added.
India’s GDP to expand 7.2% in FY25
The Indian economy is likely to hit its projected growth target of 7.2% in the current financial year, the Reserve Bank of India Governor Shaktikanta Das has said.
Despite the fact India’s economic growth slowed to 6.7% year-on-year in the April-June quarter, below the estimate of 6.9% and the RBI’s projection of 7.1%, the central banker said that the “fundamental growth drivers of the Indian economy are not slowing, they are gaining momentum”. He added: “This gives us confidence to say that the Indian growth story remains intact.”
Das said agriculture should perform better during the rest of the year due to a good monsoon and aid a further pick-up in rural demand, while strong investment activity would also see a further boost from government capex picking up pace.
“It is evident that India is on a sustainable growth path. Consumption and investment demand, the two main drivers of growth, are growing in tandem. Overall, the RBI’s projection of GDP growth at 7.2% for 2024-25 does not appear out of place.”
Das said currently the balance between inflation and growth is well poised but reiterated the need to maintain price stability to support growth over the medium to longer term.
But he warned: “We have to remain watchful of how the forces impacting inflation play out. We must successfully navigate the last mile of disinflation, and preserve the credibility of the flexible inflation targeting framework which is a major structural reform.”
