India's Savings Habits Shift from Traditional Assets to Market Investments: SEBI

Indian Households Shift from Traditional Savings Options to Market-Linked Investments

For years, saving money in India typically involved investing in gold, property, or fixed deposits. However, this traditional approach may be slowly changing. A recent research paper by the Securities and Exchange Board of India (SEBI) suggests that more households are now putting money into mutual funds and other market-linked investments, indicating that investing is becoming an integral part of everyday saving habits for many Indians.

The SEBI report highlights several key trends in household savings. One of the most notable is the surge in mutual fund inflows over the last few years. Money flowing into mutual funds through the primary market jumped from Rs 1.66 lakh crore in FY23 to Rs 5.13 lakh crore in FY25. This sharp rise indicates that Systematic Investment Plans (SIPs) and mutual funds are becoming a regular savings habit for many Indian households.

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The research paper also estimates that Indian households held Rs 141.3 lakh crore worth of assets across equities, mutual funds, debt products, REITs, and InvITs in FY25. Equities alone accounted for Rs 88.9 lakh crore, while mutual funds made up another Rs 44.4 lakh crore. This data suggests that market investing is no longer limited to a small group of seasoned investors, but has become more mainstream.

While physical assets like gold and real estate still make up the bigger share of household savings, financial savings are steadily growing. Net financial savings as a share of household savings rose from 27 percent in FY23 to 33 percent in FY25. This slow shift in behavior indicates that more households are becoming comfortable with investments linked to markets rather than relying only on traditional assets.

The post-Covid investing boom is also evident in household savings data. Household savings flowing through the securities market rose from Rs 2.59 lakh crore in FY23 to Rs 6.91 lakh crore in FY25. This increase aligns with the growth of investing apps, easy digital onboarding, and rising awareness around SIP investing over the last few years.

One interesting finding from the paper is that household participation in markets may have been undercounted earlier. Under SEBI's revised calculation, household savings flowing through the securities market stood at Rs 6.91 lakh crore in FY25. Under the older method, the estimate would have been Rs 5.43 lakh crore. The updated method now includes a wider range of investments such as ETFs, REITs, InvITs, and secondary market participation, providing a more comprehensive picture of how Indians are investing today.

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For a growing number of Indian households, market-linked investments are slowly becoming part of everyday saving habits, not just something meant for experienced investors.