Will 77% Indian families retire poorer than they should?

Summary: In 2023–24, household wealth in India surged by over 19 per cent. But here’s the catch: a big chunk of that growth didn’t come from saving more — it came from being invested in the right places. So, want to know where Indian households are saving their money, as per the latest RBI report? Let’s dig in.

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In 2023–24, Indian households witnessed a quiet wealth boom. According to the Reserve Bank of India (RBI), overall financial assets of households grew sharply last year, a 19.2 per cent year-on-year rise.

In fact, around one-third of the increase in household financial wealth since the pandemic began has come from asset price gains. That means people who were already invested in the markets — perhaps due to the surging popularity of equity mutual funds — saw their wealth grow faster than those who weren’t.

However, this brings us to a more sobering fact. Despite the rising stock market and the proliferation of mutual fund SIPs, around 77 per cent of India’s household financial wealth is still parked in traditional, low-yielding investment options — mainly bank deposits, cash and insurance and pension products.

Here’s what the numbers say:

• As of March 2024, 40.6 per cent of household financial wealth was in deposits
• 28.8 per cent was in insurance and pension funds
• 7.6 per cent in cash, most of it being stashed in savings accounts
• Just 22.4 per cent was in equity and investment funds, though it has improved from 15.7 per cent in March 2019

So, yes, there’s progress in terms of Indian households believing in equity, but from a very low base.

What’s the opportunity cost?

This overwhelming preference for ‘safe’ instruments — like savings accounts and fixed deposits — may feel secure, but it often comes at the cost of long-term wealth creation.

With interest rates trending lower, deposit returns are taking a hit. State Bank of India now offers a uniform 2.5 per cent on savings accounts, while HDFC Bank and ICICI Bank have trimmed their savings rates to 2.75 per cent, regardless of the account balance. Meanwhile, the FD rates hover around the 7.5 per cent mark.

In contrast, equity mutual funds — while volatile in the short term — have historically delivered around 12 per cent annualised returns over the long term.

So, what does that difference actually mean for your money? Let’s say you invested Rs 1 lakh and just let it sit. Over 30 years, the gap has grown to more than Rs 20 lakh. It’s the difference between retiring with enough or retiring with regret.

That’s the true cost of keeping your money “safe”.

Don’t just watch the boom

The real takeaway from the 2023–24 household wealth story isn’t just that wealth grew; it’s how it grew. A good portion of it came from asset appreciation, not increased savings. And a lot of that appreciation happened in instruments like equities, which many Indian households still avoid.

You don’t need to take reckless bets. Even a moderate SIP in a diversified equity or hybrid mutual fund can align your long-term returns with India’s growth story.

What you should do

At Value Research, we’ve seen one truth play out over and over again: if your money isn't growing faster than inflation (which grows around 5 per cent every year), you're getting poorer — slowly, quietly, inevitably.

The safest path to long-term wealth isn't locking your money in a savings account or even a fixed deposit, it's investing it thoughtfully in equities. Not recklessly, but through time-tested vehicles like diversified equity mutual funds.

If you are unsure about direct stocks, start with flexi-cap or multi-cap funds, which balance growth potential and diversification. For more risk-averse investors or new investors, consider aggressive hybrid funds, which mix equity and debt to cushion market volatility.

And no, you don’t need a large one-time amount. A simple SIP, started today, aligned to your goals and risk appetite, can build serious wealth over time. This is how you turn savings into assets and assets into freedom.

The key? Stay invested. Stay consistent. Let compounding do its quiet magic.

Need help getting started or sorting your current portfolio? Try Value Research Fund Advisor — we don’t just recommend funds, we help you build a plan by analysing it. One that actually works.

Also read: Why many Rs 40 lakh/annum earners will retire poor

This article was originally published on July 09, 2025.