CIO Speak: A new era in savings

India has historically been known as a nation of savers, with the savings rate averaging at ~30.2% (March 1951 – March 2023)1. Notwithstanding certain shifts and changes, we continue to save, albeit at a lower rate. Also, the contours of these savings are changing. Undoubtedly, savings are designed to act as an anchor for households, enabling families to achieve both their short-term as well as long-term goals. As a result, savings lead to a degree of wealth creation – and if invested judiciously, they can lead to substantial wealth creation.

Highlights

• The share of financial savings is steadily increasing, acting as a significant source of wealth creation. More importantly, even within financial savings, a shift towards high-yielding instruments like equities is becoming evident.
• Equity as an asset class can create long-term wealth and vehicles like Systematic Investment Plans (SIPs) make it easy for households to access the equity market while managing the risks associated with equity investments.
• The feeling of becoming wealthier is not restricted to Ultra HNIs but percolates all the way down to multiple strata. Indians are now moving beyond the paradigm of thinking only about ‘necessity’ and are increasingly able to afford both comfort and luxury.
• Of the USD 14 tn of wealth, nearly USD 10 tn continues to be in physical assets while more than
  USD 2 tn is in cash and deposits. Hence, liquidity driven rallies can continue to drive the multiples out of comfort zone, thereby implying that India can continue to trade at a premium to emerging markets.