India is set to add 10 crore long-term investors by 2035 as wealth creation expands to tier 2 and 3 cities, according to EY India’s ‘Wealth inclusion in India: Expanding investor participation beyond metros’ report.
It further noted the untapped potential: India currently has over 55 crore active UPI users, compared to the 6.2 crore mutual fund investors and about 5 crore active equity market participants. “The gap indicates that while digital access has scaled rapidly, broad-based wealth participation is still at an early stage,” it stated.
Given the potential, the report added that for India’s wealth inclusion agenda, expanding participation could require more than creating awareness of investment products. “It could require helping investors make better decisions at every stage of their financial journey,” moving from financial literacy to financial capability.
What is the solution to low investor participation?
The report noted that for long, financial literacy has been viewed as the primary solution to low investor participation by governments, regulators and financial institutions. And while initiatives such as awareness campaigns, educational content and investor education programs have played an important role in expanding awareness, this has not consistently translated into participation.
“Many households understand the importance of investing yet delay getting started. Many investors … discontinue SIPs during periods of market volatility… The challenge therefore extends beyond knowledge,” it added.
As per EY, the gap between awareness and action remains one of the most persistent barriers to wealth creation. “Understanding a financial concept does not necessarily mean an investor can apply that concept when faced with uncertainty, competing priorities or emotionally charged decisions,” it felt.
So, what steps should investors who aim to build long term wealth, take in order to gain financial capability? Here’s what it suggested:
How to effectively build wealth over a long-term?
According to the report, an effective capability framework should answer three questions whenever an investor faces a meaningful decision:
- What does this mean for me?
- What should I consider next?
- What risks should I understand before acting?
The report stressed that financial capability should be measured through observable outcomes: whether investors initiate appropriate investments, persist through market cycles, diversify portfolios, progress toward goals and improve retirement readiness and financial resilience. Here’s a stepwise guide:
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