WealthTech Platforms: Paving the Way for young Investors to Create Wealth

Back in the 1980s, 1990s and 2000s, finding young talented cricketers for India’s national cricket team wasn’t easy. Most debutant players used to falter under immense pressure, as they had no previous experience of playing against top notch international players. However, the situation has changed dramatically since the launch of the T20 premier league, as many young, talented Indian players started getting an opportunity to play with the best of international players, and that too in high-stake cricket games. It provided India’s young cricketers an opportunity to develop and hone their skills against some of the most established cricket players in world cricket. As a result, we now have many young, confident cricketers knocking the doors of the India team selectors and contributing to the success of the national team.

Something similar is currently happening in the personal investments space in the country, especially with regard to capital market-linked products. The emergence of several wealthtech platforms has provided young investors across the country an opportunity to start their investing journey much earlier compared to previous generations. Until a few years back, not many people used to invest in capital market products due to lack of access or awareness and those who did, mostly started investing in their 30s or maybe a few in their late 20s. However, with easy access to investment products via wealthtech platforms, we now see a large number of youngsters in their early and mid-20s investing in products such as mutual funds, stocks and bonds. For e.g. The number of unique mutual fund investors in the country has increased from 2.28 crore in March 2021 to 3.83 crore in June 2023 – that’s a massive jump of 68% in just over 2 years. Likewise, the number of demat accounts have more than doubled during the same period.

How does this benefit young investors and the industry as a whole?

Firstly, an early start provides a great opportunity for young investors to learn about a variety of investment products and nuances of investing. While reading about investing or listening to investment experts can provide a lot of useful insights, there’s no substitute for having real investing experience as investing in market linked products demands managing one’s emotions across market cycles and following discipline amidst continuous noise in the market. Learning practical investment lessons at an early age can provide these young investors a lot more confidence to make significant allocation to capital market products over time. Secondly, investing at a young age offers them an opportunity to compound their wealth over a long period of time – one of the most important tenets of successful investing. As Warren Buffet once said, “Successful investing takes time, discipline, and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”

Besides, wealthtech platforms have democratized access to investment products with investors across the length and breadth of the country now being able to invest via such wealthtech platforms. Participation of a large number of investors in the capital market can go a long way in contributing to the long-term economic growth of the country as it ensures efficient channeling of capital resources to deserving businesses and sectors of the economy. Needless to say, economic growth inturn benefits everyone, including the investors.

The road ahead

While the advent of wealthtech platforms offers several benefits to investors, investment industry and the economy as a whole, the onus is on these platforms and other industry stakeholders to ensure that these young investors do not end up making major investing mistakes that can lead to poor investing experience in their initial years of investing. As such, it would be critical for wealthtech platforms to go beyond transaction enablement and focus on providing necessary tools, features and education that can aid in investment decision making. The focus needs to be on adding value to the investing journey of these investors, so that they can stay on course to create wealth over time.

By Nilesh D Naik, Head of Investment Products, Share.Market

PhonePe Wealth Broking Private Limited is a member of NSE & BSE with SEBI Regn. No.: INZ000302639, Depository Participant of CDSL Depository with SEBI Regn. No.: IN-DP-696-2022 and Mutual Fund distributor with AMFI Registration No: ARN- 187821. Member id : BSE – 6756 NSE 90226.

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