'Forcing daily wage earners to invest in stock markets is stupid...': Expert cautions against SBI’s JanNivesh scheme; here's why
JanNivesh scheme is an SIP option that starts at Rs 250 with daily, weekly, and monthly investment plans
- Feb 19, 2025,
- Updated Feb 19, 2025 5:14 PM IST
The idea of encouraging daily wage earners to invest in the stock market is a risky and unwise move that could backfire, financial expert Akshat Shrivastava said Wednesday. In a tweet cautioning against the recent State Bank of India-backed JanNivesh SIP, the founder of Wisdom Hatch, explained that India cannot be compared to a developed economy like that of the US where a majority of adults invest in the stock market.
He argued that before thinking about stock investments, people must first have stable incomes, job security, and basic financial stability.
He also referred to the Maslow’s hierarchy that classifies needs into three -- basic needs (essentials like food, water, shelter, and clothing); wants and stability (job security, education for children, and some leisure time); and wealth building (investing in long-term financial goals like retirement planning and wealth creation).
For daily wage earners who are still struggling at the first stage of meeting basic needs, pushing them toward the stock market without savings or discretionary income is seen as irresponsible. "Such thoughts stem from utter cluelessness. And inability to see anything beyond markets," Shrivastava shared.
In the US, he said, over 62 per cent of adults invest in the stock market because of its higher per capita income and disposable wealth. In contrast, India still lacks the economic conditions where a majority of its citizens can afford risky market investments without endangering their basic financial security. "In India, that is not the situation, unfortunately.
He indicated that India must focus on job creation, higher wages, and financial literacy before expecting mass retail participation in the stock market. "People should have jobs, build discretionary income first. Then worry about the magic of compounding," he added.
What is the JanNivesh scheme?
Introduced in a joint venture by SBI Mutual Fund and State Bank of India, JanNivesh scheme is an SIP option that starts at Rs 250 with daily, weekly, and monthly investment plans. The SIP option targets first-time investors and small savers residing in rural, semi-urban, and urban areas to participate in mutual fund schemes.
Even with a monthly SIP of Rs 250, investors can grow corpus to Rs 17.30 lakh over 30 years and Rs 1.63 crore in 45 years, assuming an expected rate of return of 15 per cent.
The idea of encouraging daily wage earners to invest in the stock market is a risky and unwise move that could backfire, financial expert Akshat Shrivastava said Wednesday. In a tweet cautioning against the recent State Bank of India-backed JanNivesh SIP, the founder of Wisdom Hatch, explained that India cannot be compared to a developed economy like that of the US where a majority of adults invest in the stock market.
He argued that before thinking about stock investments, people must first have stable incomes, job security, and basic financial stability.
He also referred to the Maslow’s hierarchy that classifies needs into three -- basic needs (essentials like food, water, shelter, and clothing); wants and stability (job security, education for children, and some leisure time); and wealth building (investing in long-term financial goals like retirement planning and wealth creation).
For daily wage earners who are still struggling at the first stage of meeting basic needs, pushing them toward the stock market without savings or discretionary income is seen as irresponsible. "Such thoughts stem from utter cluelessness. And inability to see anything beyond markets," Shrivastava shared.
In the US, he said, over 62 per cent of adults invest in the stock market because of its higher per capita income and disposable wealth. In contrast, India still lacks the economic conditions where a majority of its citizens can afford risky market investments without endangering their basic financial security. "In India, that is not the situation, unfortunately.
He indicated that India must focus on job creation, higher wages, and financial literacy before expecting mass retail participation in the stock market. "People should have jobs, build discretionary income first. Then worry about the magic of compounding," he added.
What is the JanNivesh scheme?
Introduced in a joint venture by SBI Mutual Fund and State Bank of India, JanNivesh scheme is an SIP option that starts at Rs 250 with daily, weekly, and monthly investment plans. The SIP option targets first-time investors and small savers residing in rural, semi-urban, and urban areas to participate in mutual fund schemes.
Even with a monthly SIP of Rs 250, investors can grow corpus to Rs 17.30 lakh over 30 years and Rs 1.63 crore in 45 years, assuming an expected rate of return of 15 per cent.