My Money: Rise of young investors

Seema Sachdeva

It was the vibrant discussion about the stock market at home between his father and aunt that got 16-year-old Harsh Upreti, who belongs to Haldwani in Uttarakhand, interested in investing. A minor demat account he opened helped him take the initial plunge. Harsh, now 20, feels he’s been able to make sense of how the stock market works, though it has taken him years of research, much indepth study and realisation of the several mistakes he has made along the way. A third-year student of computer science, he’s at present doing his internship at an edtech firm in Mohali.

“I started with putting money in mutual funds and large caps, but now I’m comfortable investing in small caps as well as futures and options. There is much more risk involved in these, but then profits too are quite high,” says Harsh, who has accounts on multiple online platforms like Groww, Zerodha, Angle One, etc. For his strategies, he swears by Benjamin Graham’s ‘The Intelligent Investor’. It’s a much better guide, he feels, than watching videos on the stock market trade on YouTube and Instagram. He also follows investor podcasts like ‘We Study Billionaires’, ‘The Rich Dad Radio Show’, etc, besides handles of experts like Warren Buffett.

Kanishak Bansal (20), a resident of Sunam in Sangrur district, too, is wary of social media channels offering investment advice. He feels that most of these influencers have vested interests and one may end up with losses. He likes to do his own homework and researches stocks by studying the company’s book value and charts. Kanishak developed an interest in trading while researching for his father’s stocks during the Covid-19 pandemic. From his account, which boasts of a diverse portfolio, he’s been able to make a profit 2.5 times the sum he invested, he says.

Nearly 90 per cent of his investment is for the long term and only 10 per cent for the short term, says Kanishak, who is in his fourth year of architecture. “I don’t get much time in college to look at stocks, but I monitor my investments regularly,” he adds.

Equity markets in India are at an all-time high and new-age young investors like Harsh and Kanishak are driving this surge. According to a recent report of the National Stock Exchange (NSE), the percentage of investors aged under 30 years has grown from 22.6 per cent in FY19 to 40 per cent in FY25 (till May). The total number of demat accounts in the country stands at 16.2 crore, with 42 lakh being added in June itself, the highest account opening rate since February this year.

The number of new accounts on web and app-based discount brokerages like Groww and Zerodha has swelled manifold. According to the NSE, the active investor base of Groww has gone up 77.5 per cent over last year, with 95 lakh active investors in March, making it the largest broker in India (F24). At 73 lakh, its rival, Zerodha, too, recorded a 14 per cent jump in active investor base.

The potential of this growing market has led to a surfeit of influencers on YouTube, Instagram, Facebook and Telegram claiming to offer training courses, seminars and workshops to new investors. SEBI has been warning investors against unsolicited investment offers received through emails, social media or phone calls.

Gagan Kohli, managing partner at Simplifysors, a Chandigarh-based mutual fund distributor and financial planner, feels the surfeit of information on Internet is making youngsters over-confident regarding their investments. “Many a time, their decisions are influenced by tips offered by social media influencers. Most new entrants select a fund on the basis of its past performance, but do not analyse the risks the fund has taken for the returns. It is essential to study the fund books, its composition and ratio,” she points out.

Changing dynamics

A decade back, basic knowledge about stock markets among the young, say a 21-year-old, was much less, says Gurmeet Chawla, director of Master Capital Services Limited, a Chandigarh-based financial service provider. “In the 1980s and 1990s, only 1 per cent people were participating in the share market or applying for initial public offerings (IPOs). More than 25-30 per cent investors today are college-goers,” he adds.

Sharing his experience during a session on wealth management at a college, Chawla says, students were interested only in tips to buy, sell and analyse shares. “The ease of business, digitisation, financial literacy, strong market performance, more spending power, besides online access and social media sites are driving this urge to earn fast,” he adds.

An interesting case study could be that of discount brokerage app Groww, which operates on a ‘freemium’ business model. There is no account opening fee; it generates revenue through value-added services. The market share of Groww went up from 16.5 per cent last year to 23.4 per cent in FY24. Nearly 80 per cent of its transactions, according to an industry insider, happened beyond the top eight cities. Besides a user-friendly interface and 24-hour customer support, it puts a lot of focus on customer education.

Groww has been organising online and offline education initiatives like ‘Ab India Karega Invest’ in tier-2 and tier-3 cities where experts are invited to engage with young investors. Since January, the platform has seen 10 lakh SIP accounts being opened every month. In June, this number rose to 14 lakh. Today, it is considered the country’s largest mutual fund distributor.

Experts say most people, particularly youngsters, are entering the markets not for the purpose of trading, but to invest in mutual funds. The bottomline — they just want to let their money grow and forget about it.

First-time investors, says Kohli, should enter the markets only after proper guidance and knowledge. “There is no top and no bottom in this market. You need to be very careful about where you are putting your money. If you do not have the time to watch and analyse the markets on a regular basis and get a sense of the risk factors, it is better to engage investment fund managers, who will charge a small brokerage. By doing so, you get the benefit of having your portfolio customised as per your age, profile and risk-taking ability,” she advises.