Although people go on a shopping spree during Diwali, many opt for investing. While traditional investment leans towards physical gold (mostly in form of jewellery) and other cash-equivalent savings, digitally-driven investment options are becoming the preferred choice among the youth.
With technology making investments convenient and more transparent, tech-savvy urban young population are investing in equity investments (directly), cryptocurrency, digital gold, unlisted equities, global investing, real estate investing through REITs, Peer-to-Peer (P2P) lending, start-up investing as an angel investor or through VC/PE route. Here are some investment options millennials could explore this Diwali:
There has been a significant jump in the new investors in the stock market. It is estimated that a huge chunk of new investors falls in the age group of 20-30.
According to a SBI report, the number of individual investors in the market went up by 1.42 crore in FY21. “A large percentage of millennials in India are still attracted to equity trading due to ease of transaction and continuously rising markets,” says Piyush Nagda, head — Investment Products at Prabhudas Lilladher.
He said that most millennials coming on digital investing platforms are between the age group of 20 and 25 and that they were exposed to these options through the digital payment platforms such as Paytm and Gpay.
If you wish to invest on November 4 (on Diwali) in the stock market, then do not miss the one-hour special 'Muhurat trading’ between 6.15pm and 7.15 pm, which is considered an auspicious time.
Opening an account to buy digital gold is easier and faster than opening a bank account, says Renisha Chainani, head of research, Augmont. “Last year, Augmont saw 3x growth in registration of new users (even during the peak of COVID). In the case of Digi Gold (offering of Augmont), we saw the demand rise by five times.”
Digital gold is a hit among millennials mainly because it is convenient as an investment, one can invest digitally without any hassle and can purchase 24K 999 Pure Gold with even Re 1.
The World Gold Council's recent report states, “In recent times, new products such as Sovereign Gold Bond and digital gold products promoting micro-savings have made an impact among savvy urban investors.”
Chainani says, “The demand for gold this Diwali is expected to rise due to pent-up demand.”
Precious metal analyst Sanjiv Arole says investors usually return to gold when stock markets witness a dip, which led to a rise in gold prices. “With many central banks planning to put an expiration date on COVID-related packages, there will be some change in stock market behaviour compared to its present bullish behaviour.”
In the past three years, gold has given 50 per cent returns, attracting short-term and long-term investors.
Silver investments have not gained momentum in India even though it has the potential (and traditional association) to appreciate. “But if the purity factor is taken care of, things would be different,” says Arole.
Silver can be a good investment option only if purchased from a trusted seller. Chainani says, “Last year, the demand for silver went up by 2.5 times for Augmont.” Silver prices have also gone up by over 60 percent in the past three years.
Cryptocurrency and NFT
A few years ago, crypto was the talk of the town, now NFT (non-fungible token) has taken the lead. Recently, there has been a good impetus in India for these digital assets with more celebrities venturing into them.
According to WazirX, its majority of users are below 35 years of age. “The youth is looking at crypto as an alternative investment option. Bitcoin, which is labelled as digital gold by many, is one of the few assets to consider as a hedge against the current uncertainty in global markets,” said Nischal Shetty, CEO and founder, WazirX.
“In India, there is a culture of buying gold during occasions and festivals with the rationale that it can serve as a hedge during financial crisis. Bitcoin has been given the name of digital gold due to the limited supply of BTC available. HODLers believe that these traits — combined with global availability and high liquidity — make it ideal for storing wealth for longer durations, believing the value will escalate over time.”
Some crypto trading platforms allow users to start investing with as little as Rs100. Shetty says, “You don’t have to buy 1 whole Bitcoin which is worth around Rs 48.6 lakh. You can buy a fraction of BTC (or any crypto) for as low as Rs100. We’ve also seen that a lot of new investors can find order books and trading charts a little intimidating and difficult to understand. In April, WazirX launched the ‘QuickBuy’ option which allows you to buy your favourite crypto instantly with just a tap.”
This is about investing in mutual funds through systematic investment plans (SIP) or lumpsum. As of September 30, 2021, the total number of SIP accounts is 4.49 crore. According to Association of Mutual Funds in India (AMFI) data, the number of investor folios has gone up to 11.17 crore as of September 30 — more than two-fold increase in five years.
Nagda says, “P2P lending also gains traction due to increased borrowing in the festive season. Otherwise, most of the serious investments are market opportunity-driven and not tied to any festive season.”
Under the rules, the P2P platform is not allowed to hold the funds invested by the lender or paid back by the borrower. Such funds are to be held in an escrow account, so the platform itself does not have any access to the money.
(This is not investment advice and does not recommend any investment product)