Gen Z Investment Trends: Stocks or Mutual Funds?

New Delhi: India’s Gen Z investors are rewriting the country’s investment landscape by moving away from traditional savings instruments and focusing on long-term wealth creation through stocks, SIPs and mutual funds. Unlike previous generations that preferred fixed deposits, Public Provident Fund (PPF) and gold, young investors are embracing market-linked investments at an early stage of their careers.

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According to data from the National Stock Exchange (NSE), more than 56% of newly opened SIP accounts belong to investors below the age of 30, highlighting the growing participation of young Indians in financial markets. The rapid adoption of smartphones, digital brokerage platforms and improved financial literacy has made investing more accessible than ever before.

Young Investors Allocate 15–20% of Income to Investments

Studies by Groww and Zerodha indicate that most Gen Z investors allocate 15% to 20% of their monthly income to stock market investments. Mobile investment apps allow them to track portfolios in real time and make quick investment decisions based on market movements.

Starting Small, Thinking Big

Unlike older generations that believed investment should begin only after accumulating substantial savings, Gen Z prefers starting early with smaller amounts. Research shows that an average young investor invests ₹10,000 to ₹15,000 every month, helping build long-term wealth through disciplined investing.

SIP Remains the Most Preferred Choice

Systematic Investment Plans (SIPs) continue to be the most popular investment option among young investors. Regular monthly investments help reduce market volatility while encouraging long-term financial discipline and wealth creation.

How Gen Z Invests Their Money

According to NSE data, Gen Z investors are diversifying their portfolios across multiple asset classes:

47% invested in direct equities and equity mutual funds.

21% allocated to hybrid investment schemes.

17% invested in solution-oriented long-term funds.

11% invested in debt funds and government securities.

3% invested in other financial products.

The data suggests that while young investors are willing to take higher risks, they also focus on diversification to reduce overall investment risk.

Social Media Drives Investment Decisions

Instagram Reels, YouTube Shorts and Telegram have become major sources of financial education for Gen Z. According to studies by Groww, Zerodha and Upstox, more than 60% of investors below 25 years rely on financial content creators on social media before making investment decisions.

SEBI Warns Against Unregistered Financial Influencers

The Securities and Exchange Board of India (SEBI) has advised investors to remain cautious while following financial advice on social media. The regulator has warned against blindly trusting unregistered “finfluencers” and urged investors to verify whether financial advisors are officially registered with SEBI before acting on investment recommendations.

Maharashtra Leads in Demat Accounts

NSE data shows that India now has over 25 crore Demat accounts, with Maharashtra leading the country with 4.2 crore registered investors. Uttar Pradesh, Gujarat, West Bengal and Rajasthan follow in terms of investor participation.

Tier-2 and Tier-3 Cities Fuel Investment Growth

Investment is no longer limited to metropolitan cities such as Mumbai and Delhi. According to Groww, nearly 70% of its users are aged between 18 and 30 years, and over 70% of them belong to Tier-2 and Tier-3 cities, indicating the rapid expansion of financial participation beyond major urban centres.

Renting Over Home Ownership

Gen Z is also redefining lifestyle choices by preferring rented accommodation over buying homes. Many young professionals choose renting to avoid long-term home loan commitments, allowing them to continue investing and maintain greater financial flexibility.

Real estate reports indicate rising demand for premium rental homes in cities such as Mumbai, Bengaluru and Chennai as career mobility, hybrid work models and high property prices influence housing decisions.

India’s Investment Landscape Is Becoming Younger

The average age of Indian stock market investors has declined from 36 years to 33 years, according to NSE data. Experts believe that consistent SIP investments, portfolio diversification and long-term financial planning could significantly strengthen the financial future of Gen Z investors. However, they also advise investors to understand risks thoroughly, conduct independent research and avoid relying solely on social media recommendations before making investment decisions.

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