Key Highlights

• 63 percent of households are aware of stocks and mutual funds

• Only 9.5 percent actually invest in market linked products

• Risk fear, income uncertainty and lack of trust limit participation

• Traditional savings options still dominate household preferences

• Financial awareness has improved, but behavioural confidence is missing

Why Most Indian Households Know About Markets but Still Do Not Invest

The Securities and Exchange Board of India Investor Survey 2025 brings out an important reality of India’s financial system. Nearly 63 percent of Indian households are aware of securities market products such as stocks and mutual funds. Yet, only about 9.5 percent of them actually invest.

At first glance, it may seem that financial awareness in India has improved. But this data shows that awareness alone has not led to action. The real challenge is no longer about information. It is about behaviour, trust, income stability and how risk is viewed by households.

Awareness Exists but Confidence Does Not

Over the past decade, India has seen strong efforts to spread financial awareness. Campaigns by regulators, mutual fund advertisements, digital apps, social media content and a rise in demat accounts have made people familiar with market products.

Most families today know that :

• Mutual funds exist

• Stocks can give higher returns

• Markets go up and down

However, this knowledge does not automatically create confidence. People may recognise these products, but they often lack the clarity and belief needed to take the first step.

Risk Is Felt Emotionally Not Mathematically

For many households, risk is not measured through charts or numbers. It is seen as the fear of losing hard earned money saved over many years.

Money for these families is linked to :

• Security

• Family responsibility

• Future uncertainty

Even a small chance of loss can feel unacceptable. This is why fixed deposits, gold, insurance products and real estate continue to dominate savings, even if returns are low. These options provide emotional comfort and predictability that markets do not.

Income Uncertainty Limits Investing

A large number of Indian households do not have stable monthly cash flows. Income can be irregular or uncertain. In such cases, people prefer liquidity and safety over long term wealth creation.

Even if they understand markets, they hesitate to invest because market values can fluctuate. This makes it hard for them to commit money for the long term without stress.

Complexity and Overload Create Hesitation

Financial products often appear complex. Market language, disclaimers and jargon can make investing look like something meant only for experts.

While digital platforms have made access easier, they also present too many choices, charts and alerts. For a first time investor, this can be confusing rather than helpful, increasing hesitation instead of reducing it.

Trust Plays a Big Role

Awareness does not mean trust. Past market crashes, cases of mis selling and sharp market falls still affect how people think.

Older family members, who often make financial decisions, carry these memories. Younger earners, even if comfortable with technology, inherit this cautious approach. Many wait until income rises or friends begin investing before they enter markets.

What This Means for India’s Financial Growth

This gap between awareness and participation shows that India’s financial journey is still at an early stage. Efforts have focused more on spreading information and access, but less on building long term confidence and trust.

Low participation also affects capital markets. A broad household investor base is important to reduce panic during market swings and to provide stable long term capital.

What Needs to Change

The survey suggests that the next phase of financial inclusion must focus on behaviour and comfort, not just awareness.

Steps that can help include:

• Encouraging small and regular investments

• Simplifying how risk is explained

• Designing products that suit household cash flow patterns

• Promoting long term discipline instead of short term returns

Rising demat accounts do not automatically mean active investing. Many accounts remain unused after initial curiosity.

The Larger Economic Opportunity

Since most household savings still go into low return assets, there is a large untapped opportunity. If participation improves gradually, it can increase the pool of long term domestic capital for the economy.

The gap between 63 percent awareness and 9.5 percent participation shows that people know about markets, but do not yet feel safe enough to be part of them.

True financial empowerment will happen not when people simply recognise market products, but when they feel confident, stable and informed enough to invest for the long term.