When it comes to deploying their hard earned money, Indians rely heavily on physical assets like real estate and gold rather than financial assets. In fact, the average Indian household holds 84% of its wealth in real estate and other physical goods, 11% in gold and the rest 5% in financial assets like deposits and savings accounts, publicly traded shares, mutual funds, life insurance and retirement accounts, as per All India Debt and Investment Survey.
There is a huge variation in the investing patterns across the country. Bihar, Jharkhand and Uttar Pradesh top the list of states putting maximum money in real estate at 90%, 85.6%, and 85.4% respectively. While Andaman and Nicobar, Daman and Diu stands at the bottom with 42.5% and 48 % money parked in it respectively. Around 55% of Delhi’s wealth goes into real estate.
On the other hand, households in Tamil Nadu, Pondcherry, Daman and Diu and Andaman and Nicobar have strong penchant for gold as they put 28.3%, 25.7%, 24.4% and 23.5% of their money respectively towards this asset. (See more in the table)
Only a handful of Indians hold financial assets and the figure is not very encouraging. Households in Dadar and Nagar Haveli, Sikkim and Daman Diu have the highest share of wealth in financial assets standing a little over 10%. Chandigarh and Dadar and Nagar Haveli hold the maximum share of wealth in retirement accounts standing at 14.1% and 18.1% respectively.
While Indian households choices mirrors Thai households with almost same per cent of wealth put in real estate, it is in stark comparison to trend witnessed in advanced economies like US and Germany where real estate account stands for their low fractions of wealth at 44%, and 37% respectively, as a per an analysis revealed in a report of the household finance committee released by RBI lately.
Also households in other advanced nations like Australia and the UK put relatively larger share of their wealth in retirement assets at 23% and 25% respectively.