Gen Z's Financial Choices Driven by Tech, Impulsivity: 93% of Indian Traders Lost Money
Gen Z's financial decisions are increasingly influenced by formula shortcuts and technology, leading to impulsive choices and hidden risks. A stark example is India's retail derivatives market, where 93% of traders lost money between FY22-FY24, drawn in by ease of use and promises of quick gains.
At the core of financial security lie timeless principles like budgeting, understanding risk-return relationships, and diversification. However, these are often overlooked in favour of formula-driven behaviour, facilitated by technology. Copy-trading platforms, automated bots, and mainstream apps promote fast, momentum-based decisions, leading to impulsive financial choices.
In India, this trend is amplified by social media. A study, though the source is unknown, found that 85% of young investors are influenced by social media in their investment decisions. These platforms promote 'hot tips' and stories of overnight success, further swaying young investors' choices. Meanwhile, complex concepts like compounding are often reduced to simplistic slogans, leading to misunderstandings.
As India's retail digital payments market is projected to double by 2030, reaching USD 7 trillion annually, it's crucial for young people to be financially literate. Understanding and applying timeless financial principles can help Gen Z make informed decisions in this increasingly digital landscape, mitigating risks and fostering long-term financial security.
