Most Indians still comfortable with investments in real estate and gold: Reserve Bank report

NEW DELHI: When it comes to saving one’s hard earned money, Indians still bank on traditional methods of investment.

According to a recently released report of Reserve Bank of India (RBI) on investment patterns, it has come to the light that the average Indian household holds 84 per cent of its wealth in real estate and other physical goods, while 11 per cent in gold and the residual 5 per cent in financial assets.

As per the findings of the report, financial assets such as mutual funds and Public Provident Fund (PPF) are secondary investment options while the pricey yellow metal is still the first choice to ‘save’ hard-earned money to be used at the time of need.

The RBI report further stated that Tamil Nadu has 28.3 per cent of its total assets in the form of gold, which is followed by Andhra Pradesh with 21.6 per cent of the state’s total asset in the form of yellow metal.

The similar trends have also been reported from other southern states such as Telangana with 17.5 per cent of the state’s total asset in gold, 16.1 per cent in Karnataka, 13.1 per cent in Kerala. Most of the south-bound states have gold assets more than the national average of 11 per cent.

The report also stated that people are least interested in saving their assets through mutual fund schemes, term plan, share market, bonds, PPF, life insurance, health insurance and pension schemes. Expressing concern over poor investment practices, the report highlighted that even educated people opt for traditional methods of investment such as blocking their money by buying gold or in real estate.

The report has also brought to notice that even well-off people prefer to invest in real estate after selling their stocked gold rather than putting in money in financial assets, which is resulting in the rise in the rates of property and gold.

“Retirement accounts play a very limited role in household balance sheets, even at the top of the wealth distribution. Indian households continue to accumulate debt as they approach retirement age,” the report said, adding that about 56 per cent debt is unsecured reflecting an unusually high reliance on non-institutional sources such moneylenders.

Commenting on the findings of the report, noted economist Gourav Vallabh said, “The trend of investing in gold is all due to its liquidity.”