India shifts from savings to market-led wealth creation

In a recent report by Bain & company titled, “How India Invests 2025” provided a comprehensive insight on the Indian household wealth landscape, investor behavior and the economic impact of retail investing. It illustrates how the country has shifted from savings to wealth creation and reveals a fundamental transformation in India’s financial landscape. The decisive transition from traditional landscape to capital market investments powered by digital-native, young and diverse investor base. This shift is not just reshaping household wealth but is also emerging as a critical engine for broader economic growth.

The great wealth shift from deposits to markets has particularly accelerated post-pandemic and due to the digital platforms. The Indian household wealth is now estimated at Rs1,300–1,400 lakh crore. The standout trend is the accelerated growth of mutual funds (MF) and direct equity, which are now outpacing traditional deposits marking a move from a savings mindset to an investment mindset.

However, a significant growth opportunity remains. While MF and equity constitute only 15-20 per cent of Indian household investable assets, this figure stands at 50-60 per cent in the US. Closing this gap is the future trajectory.

Mutual Funds: Individual MF Assets Under Management (AUM) are projected to soar from Rs41 lakh crore (FY25) to over Rs300 lakh crore in the next decade.

Direct Equity: Individual holdings are expected to grow from Rs42 lakh crore to approximately Rs250 lakh crore by FY35.

At the heart of this change are digital platforms, which onboard ~80 per cent of new direct equity investors and ~35 per cent of mutual fund investors. This digital surge has democratized access, leading to a uniquely diverse investor profile remains the digital engine.

Young: Gen Z and Millennials make up ~80 per cent of the digital investor base.

Geographically Dispersed: About 50 per cent of investors are from Tier-2+ cities and beyond.

Participation from women and younger demographics is rising steadily, making it more inclusive. The report identifies seven distinct investor archetypes on digital platforms, from cautious salaried millennials in metros to more hands-on business owners.Common trends include a behavioral shift from speculative trading to long-term investing and a growing comfort with risk, seen in increased allocations to mid-cap, small-cap, and thematic funds.

Systematic Investment Plans (SIPs): SIPs have become the bedrock of discipline, a cultural phenomenon, symbolizing disciplined investing. While lump-sum investments are gaining share as investors mature, SIP inflows show remarkable stability, continuing steadily even during market volatility. The average SIP ticket size is also rising, reflecting growing confidence.

The retail investment boom is catalyzing broader economic development creating economic ripple effects beyond the personal wealth.

Capital Access: Surging retail liquidity is fueling a boom in IPOs, especially for Small and Medium Enterprises (SMEs), enabling them to raise capital for growth and job creation.

Market Resilience: Growing domestic MF and retail inflows act as a buffer against volatile foreign investor flows, making India's capital markets more stable and shortening post-crisis recovery periods.

Job Creation: The sector is expected to create over 7 lakh new jobs in the next decade—from financial distributors and wealth managers to roles in companies expanding via IPO capital.

Wealth Democratization: Easier access allows a broader population across geographies and demographics to participate in India’s economic growth story.

The report positions retail investing as a key pillar for India’s Viksit Bharat mission of road to $30Tn economy. As GDP per capita targets a sixfold increase by 2047, individual MF AUM as a percentage of GDP is expected to grow from ~9 per cent to ~80 per cent. This underscores the critical link between mass participation in capital markets and national economic ambition.

The report paints a picture of a financially evolving nation. Driven by digital access, regulatory support, and financial literacy, millions of Indians are moving their money from passive savings to active wealth creation. This is building a more secure financial future for households while simultaneously providing the capital, stability, and inclusivity needed to power India's ascent as a global economic powerhouse. The journey from financial inclusion to true financial well-being is well underway.

(The author is a partner at “Wealocity Analytics”, a SEBI registered Research Analyst firm and could be reached at [email protected])