Cautious Money: Gen Z is obsessed with saving and investment

A recent interaction with a 24-year-old Gen Z client surprised Goa-based investment advisor Upasana Mondal. The young information technology (IT) professional, who had just received his first bonus, used artificial intelligence (AI) to simulate the outcome of a 10-year portfolio, comparing the performance of a crypto asset with that of an index fund, to find out where he should invest.

A few years ago, a client of that age would typically have bought a crypto asset for the fear of missing out, or simply purchased stocks suggested by social media influencers, says Mondal, the founder of financial advisory DreamBluePrintz.

Mondal says members of the Gen Z are using technology for investment choices, showing they are not just tech-savvy, but data-rational as well.

India’s Gen Z or Zoomers, the generation born between mid-to-late 1990s and early 2010s, succeeding the Millennials, are maturing as investors in an economy shaped by a digital-first environment and unprecedented access to financial products. Surprisingly, they are preferring capital appreciation over quick returns promised by riskier investments like crypto assets; they are hedging against inflation and currency depreciation through gold while using systematic investment plans (SIPs) as a form of rupee cost averaging to manage equity volatility.

Take 22-year-old Shivam Mishra. The New Delhi-based investor says he saves around 20% of his salary. Out of this, half goes to SIPs in mutual funds. The 22-year-old finds bullion, especially silver, an interesting prospect but not because of the surging price of the metal. “It is because of fundamentals, the shortage of physical silver," he says.

Mishra says he has made some investments in cryptos in the past and enjoyed the initial returns. But mounting losses amid geopolitical flare-ups made him pivot. A Gen Z Consumption Behaviour Survey of 4,300 respondents across 12 cities by PRICE underscores the inference of investment advisors like Mondal about the behaviour of Gen Z investors.

Survey findings

Some 40-41% of Gen Z investors prefer owning gold and fixed deposits (FDs), shows the survey. Among them, 47-48% of the participants, who are government employees, prefer FDs and gold. But 37-39% of privately employed individuals also prefer the traditional assets, highlighting the continued relevance of such products even among young earners perceived to be more amenable to risk.

Wealth preservation remains central to their thinking, the data on respondents aged 18-29 years suggests. Despite Gen Z growing up in a Digital-First environment, crypto currency investments remain only a marginal preference. Only 6% respondents suggest a preference for crypto investments, which did attract 19% of the respondents with education below primary levels.

Asset-building, typically real estate, appears to be gaining traction as participants climb up the income strata. A total of 68% respondents earning Rs 15 lakh and above show a preference for real estate investments; 29% prefer Mutual Fund (MF) investments through SIPs and 25% like to dabble in stocks directly.

Abhishek Kumar, an investment advisor at financial planner SahajMoney, says the behaviour is reflective of a broader transition. Gen Z is navigating a middle path between the caution of earlier generations and the tendency of global peers to experiment and take risks, he says.

Their portfolio preferences suggest an attempt to hedge against inflation through equity exposure while preserving purchasing power through gold alongside fixed-income investments.

“This generation does not view gold as ‘jewellery ’ but as a ‘digital safe haven. ’ The rise in digital gold and SGBs (sovereign gold bonds) shows they value stability but want the convenience of a digital transaction. The shift away from crypto suggests a maturing mindset,” says Mondal.

Demographic variations

The survey highlights clear demographic variations. Metro respondents show a higher inclination towards MF investments via SIPs, with 30% preferring the avenue compared with 27% in Tier-II cities. Tier-II respondents show a stronger preference for gold, with 44% favouring the precious metal and 43% going for FDs. Male respondents lean more towards equities and real estate; 51% of women show a stronger preference for gold.

Education continue to shape investment choices. Post-graduates show a higher preference for gold, FDs (51% each, MFs and real estate (40% each). In comparison, respondents with lower education levels show a lesser preference for majority asset classes barring cryptos.

By occupation, government employees show a strong preference for FDs and Public Provident Fund (PPF) at 48%. Self-employed individuals and entrepreneurs favour real estate, gold and FDs; private-sector salaried respondents maintained a more balanced asset allocation.

Income levels reveal a clear trend towards diversification. Respondents earning above Rs 10 lakh annually have a higher participation in real estate and gold; lower-income groups favour FDs, PPF and other savings avenues. High-income households showed the strongest preference for gold at 54%, FDs at 48%, SIPs and mutual funds at 46%, and real estate at 46%.

Inside a Gen Z mind

Advisors say Gen Z investors frequently ask about MF SIPs versus direct equity investing, as well as tax-saving instruments such as Equity-Linked Savings Schemes.

Kumar notes that while Gen Z is quick to open investment accounts digitally, limited market experience leaves many underprepared for volatility. As far as savings go, despite relatively healthy saving rates, most Gen Z members do not maintain an emergency fund and instead channelise savings directly into equities.

Mondal says Gen Z recognises that they have the time but not the bandwidth to track 500 stocks. SIPs allow them to participate in India’s growth story without the market volatility of individual stocks.

For a few, says the New Delhi-based Kumar, limited exposure to personal finance education means many are unfamiliar with concepts such as compounding, mechanics of SIPs, FD returns relative to inflation, and long-term wealth protection offered by different asset classes.  

Saving grace

The PRICE survey shows that 41% of respondents save between 20% and 40% of their income, while 32% save up to 20%. About 13% save 40-60% while 3% reported saving most of their income. These trends showed little variation across genders. Education emerged as a differentiating factor. Around 51% of post-graduates save between 20% and 40% of their income. This proportion declines steadily as education levels drop, ranging from 16% to 38%among graduates, higher secondary, matric and below primary groups.

Gen Z today spends time and effort to learn about investing, says Saurabh Bansal, founder of Finatwork Investment Advisors. He notes that Gen Zs value work-life balance and that they just do not derive identity from their work; they focus on the quality of work.

“I would suggest them to keep 20-30% of their income aside and divide it into three buckets 1) for the next experience (reward oneself for showing discipline) 2) for long term (towards financial independence) 3) risk bucket (investing in an idea they are bullish about),” says Bansal.

Kumar advises Gen Z investors to first build an emergency corpus covering at least six months of expenses and clear high-interest debt before investing. He says equity investments should be considered only with a five- to seven-year horizon alongside diversification across fixed income, equities and assets such as gold.

“With so much AI-generated advice and ‘finfluencer’ content, the biggest risk is over-analysis. Stick to the basics: low-cost index funds and FD and gold for balancing,” says Mondal.

@amit_mudgill