If you think that retirement planning and children’s education are the main reasons why people invest, you are wrong. A report jointly published by PFRDA and CRISIL reveals that retail investors invest to avail of tax benefits.
Of the 5,356 respondents across the country, close to 2,600 people cited capital gains as the primary reason for investment.
Life style improvement followed, with 2,500 respondents citing it as their reason for investing.
This shows that investors prefer investing to spend on improving their current lifestyle rather than planning for their future. This was evident from the fact that retirement did not find place in the top five investment reasons among households in India.
The report suggested that the financial services industry should encourage investors to invest for their long term goals like retirement. This could be possible only when these products deliver attractive returns over a long period, says the report. The report recommended increasing equity exposure in long-term retirement products such as NPS to make it attractive. “The pension system under this pillar is skewed towards debt, compared with global peers, which are strongly invested in equity. The debt skew is despite the demographic advantage the country has and is expected to enjoy over a long term. The young population has a long-term investment horizon, which calls for greater allocation to a long-term asset class such as equity for wealth creation,” the report says.
Further, liquidity needs and buying a house too drove investors to make investments.
Close to 5,356 urban investors, across the country, participated in the survey.
Source: SEBI Investor Survey 2015
