What Drives the Percentage of Investment in Stock Markets in Different Countries?

Stock Market

In 2016, a revelation of a statistic regarding the percentage of Indians who invest in the stock market revealed a shocking number: 2%. The growth of mutual funds and the development of ‘easy to use’ mobile applications have increased the number slightly in the past three years. However, the metrics are still baffling.

The percentage of UK citizens who invest in a stock is 23%, while in Germany is only 14%. Most interestingly, the percentage of equity and other asset investors in the US  is 54%. Hence, it can be said with absolute certainty that risk-taking is a culturally driven factor as well.

Average Population And Nature of Economies A Factor Driving Risk Taking Tendencies?

A 2018 consensus report revealed that more than 65% of the Indians are younger than 35 years. It is also expected that by the year 2020 the average age of Indians will be 29 years. Therefore, as the average Indian gets younger, the risk-taking factor will probably increase in the subcontinent as well.

The average age of Americans is 37.5 years. Hence, more people from 80s or before can be expected in the US than in India. While the difference in the economy of the two regions varies considerably, wealth distribution is common in almost all regions of the world. Wealth distribution is essentially the difference between the poor and the rich.

The millennial population of today’s India woke up to the 2008 stock market crash. While the average American Population woke up to a different truth in their adolescence: a hunky dory economy where everybody was rich and everybody held stocks. Things were not the same post the 2008 aftermath. Nevertheless, an interesting statistic reveals that the confidence of Americans in stocks and other investment avenues is considerably huge.

Just over half (54%) of Americans own stocks, according to a 2017 Gallup report. That includes individual stocks, 401(k) plans, shares in an equity mutual fund or an IRA account.

Where do the Indians Invest?

Average Salary of Indian Citizens

The above image shows the average salary of Indian College Graduates in different fields. The metrics reveal that salary in the range of $200-$250 dollars per month is certainly not adequate to make a long, mid-term investment or even short term investments.

Hence, most of the citizen’s saving are locked in savings bank accounts or Fixed Deposits. Moreover, with targeted PR and an adequate supply of mutual funds, the trend is slowly shifting towards equity as well.

Furthermore, lack of knowledge and feasibility of buying and selling stocks has also been the biggest bottleneck responsible for low investment rate. Moreover, India Companies in a developing environment with cordial global relations stand a greater chance to grow in the coming years.

Leave a Reply

Your email address will not be published. Required fields are marked *