Tier 3 cities, women, Gen Z lead savings & investment trends

New Delhi: A recent report by Fin One, the digital initiative of Angel One, provides a comprehensive analysis of the savings and investment behaviours of young Indians. Based on data collected by Nielsen Media, the report highlights significant regional, gender, and age-based disparities in financial habits, offering insights that could influence financial planning strategies in the country.

The study challenges traditional notions of financial prudence, particularly in urban versus rural areas. It reveals that 42 per cent of respondents from Tier 3 cities save over 30 per cent of their income, outpacing their counterparts in Tier 1 (35 per cent) and Tier 2 (37 per cent) cities. This finding underscores a remarkable trend of disciplined financial behaviour in smaller towns, traditionally seen as less financially forward. Regionally, the South emerges as a leader in disciplined savings, with 48 per cent of respondents allocating 20–30 per cent of their income towards savings.

A noteworthy generational shift is also apparent. Among 18–21-year-olds, 59 percent save 20–30 percent of their income, compared to just 39 percent in the 22–25 age groups. This suggests that younger Indians are adopting savings habits at an earlier stage, emphasizing the growing awareness of financial stability among the youngest demographics.

The report also delves into investment preferences, revealing a striking affinity for stocks among Tier 3 respondents. Stocks are the favoured investment vehicle for 62 per cent of this group, compared to 48 per cent in Tier 2 and 31 per cent in Tier 1 cities. Awareness of stocks is also notably higher in Tier 3, where 91 per cent of respondents are familiar with this option. This trend points to a growing appetite for high-risk, high-reward investments among smaller-town populations.

Gender disparities in financial habits also emerge prominently. While 48 per cent of men prefer investing in stocks, only 39 per cent of women do. Women, however, display a stronger inclination towards insurance as an investment, with 8 per cent choosing this option compared to 3 per cent of men, reflecting a heightened focus on long-term financial security. Interestingly, women are also ahead in financial awareness, with 48 per cent being familiar with credit scores, compared to 31 per cent of men.

Digital platforms are playing an increasingly vital role in financial education. The report notes that 74 per cent of women turn to YouTube for financial knowledge, compared to 59 per cent of men. Despite these strides, financial literacy remains a challenge, with two in five women finding taxation and investments difficult to understand. Among men, half struggle with understanding investment options, highlighting the need for improved financial education initiatives.

The study also touches upon financial priorities across urban and rural settings. Nearly 20 per cent of respondents in Tier 1 cities prioritize saving for emergency funds, a rate significantly higher than the 10 per cent recorded in both Tier 2 and Tier 3 cities. Tier 1 respondents are also three times more likely to manage household finances jointly compared to those in Tier 2 and Tier 3. Conversely, reliance on parental support for financial management is nearly twice as high among Tier 3 respondents.

Younger respondents exhibit a preference for high-risk investments, with 72 per cent of those aged 18–21 favouring stocks, compared to 46 per cent in the 22–25 age group. Awareness of alternative investment options like bonds is higher in Tier 1 cities, where nearly half of the respondents are familiar with them, compared to just one-third in Tier 2 and Tier 3 cities.

These findings build on insights from an earlier report, *Fin One: Young Indians’ Saving Habits Outlook 2024*, which highlighted a strong culture of saving among Millennials and Gen Z, with 93 per cent of young Indians saving regularly. It noted that stocks and mutual funds were their preferred investment choices, with 58 per cent investing in stocks and 39 per cent in mutual funds. The report also highlighted the growing role of digital platforms, with YouTube being a primary source of financial guidance for 62 per cent of respondents.