Is Gen Z in India Moving Towards Financial Independence? - A Study of Their Investment Preferences

Abstract

Gen Z are financially more sophisticated than any previous generation was at their age and are only at the beginning of their journey to financial independence. With increasing evidence of Gen Z investing in India, the current study aims to explore their investment preferences. A survey was conducted for age group 15-25 asking them about their source of monthly funds, proportions and reasons for saving, investment preferences including proportions, avenues, time frame, risk perceptions and behaviour of investing. The study finds that saving habits of Gen Z are significantly different across gender, age and annual family income and they are gradually moving towards financial independence by relying on their own earnings. Consequently, we found that Gen Z’s investments were largely influenced by higher saving proportions and investing experience of their family members. We also observe that Gen Z is investing long term in assets like Equity Shares, Mutual funds, Fixed Deposit and Gold/Silver, and intraday in risky assets like Crypto.  Factors like rate of return, long term gains and historical performance were found to influence their investment decisions as more than 50% of the Gen Z were found likely to invest in Growth and SIP’s of mutual funds, Growth and Value equity stocks and in Banking and Information Technology sector. Lastly, we see that majority of Gen Z follows a herd behaviour, uses new age investing apps, fearing losses find it difficult to take the first step in investing but are optimistically ready to learn and improve their investing skills.