Young India leads!

The Rise of Young Investors

Interesting data from the NSE (National Stock Exchange) shows the rapid growth of young investors in the market. From March 2018 to May 2024, the share of registered investors under 30 years old increased from 23% to 40.1%. This surge happened especially after the COVID-19 pandemic, with a significant jump each year. This indicates a doubling of young investors in just six years.

Decline in Older Investors

While young investors are increasing, the percentage of older investors is decreasing. Investors aged 40 to 49 dropped from 20% to 15.5%. Similarly, those aged 50 to 59 fell from 13% to 8%, and investors 60 and above decreased from 12.7% to 7.3%. Even the 30 to 39 age group saw a slight decline from 31% to 29%. This shows that the market is becoming younger at a rapid pace.

Market Experience and New Investors

A significant point to note is that about 70% of market participants are now under 40. This means their market experience is likely less than 15 years. Most of these investors have not witnessed long bear markets like the Global Financial Crisis (GFC) of 2008 or the dot-com bust of 2001-2003. Their experience has mostly been with good times, with the exception of the COVID-19 market crash in 2020.

Market Resilience and Rapid Recovery

Interestingly, the market has shown remarkable resilience in recent years. Historically, recessions or demand collapses would lead to prolonged bear markets. However, recent downturns, like the COVID-19 crash, were met with significant monetary injections and stimulus by governments and central banks. This led to quick recoveries. For example, during COVID-19, the market dropped from 12,000 Nifty to about 7,500 but recovered to a new all-time high within a year.

Demographic Dividend and Market Growth

India’s demographic dividend is becoming increasingly visible. As more young people join the workforce, the investor base is expanding rapidly. Companies are educating new recruits about investment options, and many young professionals are starting their investment journey from day one. The number of DEMAT accounts has surged from around three crores in March 2020 to over 12-13 crores now, showing exponential growth in market participation.

The rapid increase in young investors is a promising sign for the future. This trend indicates that the market is likely to continue growing as more young people enter the workforce and start investing. While there will undoubtedly be challenges and market fluctuations, the influx of new savings into the market is a positive sign. The market is likely to benefit from this increased participation, leading to a potentially prosperous decade ahead.

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