Inspite of the share markets doing better than any asset class in recent times, why is the participation so less in India compared to the developed countries?

Even in Mutual Funds, investments are 1/10th compared to Fixed deposits where as its 4x to 5x of FDs in Europe & US. So what according to you is keeping people away and what will get them to enter the Stock Market?


Dude, fds give return of 9% per year whereas stock markets give return only once in some time when it very undervalued, in normal times its return are same as of fds or even less then fds, in developed markets there fds upto maximum give return of 0.5%, thats why funds are best there, (india is a place not to invest in stock markets but in fds)-a quote from fiis

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What I feel is that less participation is due to low awareness of Share Trading in India. Even Technology is not on par with developed countries. When I say technology it involves everything like internet penetration, bandwidth speed, high costs of affordability of internet in India etc. Then there are training/education pertaining to Share Trading which is very low in India.

FD’s are more conservative and they give you risk free returns of 8-9% per annum.

Share Market gives an average of 15% returns per year, but here risk is involved.

So, people are afraid/skeptical to invest in the Share Market because of Risk Factor. Only those people will invest/trade om Share Market who knows how to manage this risk.


I would say the two main reason being -

  1. Lack of awareness - People usually consider this as gambling

  2. Greed- people buy and sell at wrong time make losses because they never learned anything about fundamentals or technical…

Basically most of them don’t understand it and they end up judging it negative.

and LAST REASON- its not in Engineering course :stuck_out_tongue:


people not aware of market completely & many of them don’t want to take risk.peoples always take example of those who have faced failures in the market & stop investing or trading as a reason for not to trade. Many of them still confused as there are number of broking firms & banks advertising themselves as best & they are unable to decide what to go for. Many of them believes that instead of trading they can do a fixed deposit which gives intrest & there money is always safe.

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“According to me” The participation is very less because of FEAR of loosing…we have always heard that people saying that share market is a GAMBLE OR PURE LUCK…and we have always been said that do not gamble it’s not a correct thing and second we are not confident enough to fight for our luck just because a one person said that it’s totally on luck basis and we think that we are not that lucky. Also there is no awareness about the market among the people they actually don’t know what are the benefits they can have. We are trained for earn, save, go for FD’s that’s all no other things, stock market and all are for big shots we just need to save and keep for our family no other expenses but they don’t know that whatever they are saving for future expenses will also be increased with their money so if want to beat the inflation they have to be a bit faster and for that they have to trade. :slight_smile:

As per my observation,

  1. Lack of financial literacy ( Especially about Stock Market Concepts), There is no subjects or concepts included about stock markets even in basic level in most of the Financial and management courses like MBA.

  2. No Awareness in General Public as they don’t understand how stock market work, in there terms investments is buying property or gold.

3.The markets have not been able to generate the trust that nationalised banks have been able to create in INDIA

4.Markets are subjected to RISK , But that “Risk” is misunderstood wrongly by General Public.


It is mainly due to lack of awareness among the Indian retail. What hasn’t helped also are those people who have lost money trying to punt for shorter term trading, and spreading the fear about markets. Also relationship managers haven’t helped, If anyone has invested through a RM, he was most likely sold something that will generate maximum revenue to the relationship manager and hence compromising on clients eventual return. I remember ULIP’s which were RM’s favorite because almost 60% of the first year investment would sometimes be paid back as commission.

The other thing also is that India is in this real estate bubble for the last decade, most people either have an EMI on a house or saving up to buy a house. This has also caused people to not look at the stock markets. Most people investing in real estate assume that the money is guaranteed, mainly because people have short memory and don’t remember the last time real estate price crashed in India. (back in late 90’s). Every person who has a site/house in metro is like a crorepati, but what if everyone tried to sell it? Who will be the one buying this? what is the real value of the house then? Real estate markets are illiquid, and if the market turns around, it will be a precipitous fall.

With real estate peaking, gold in a long term bear run, FD not giving you a return to beat inflation - especially since it is taxed based on ur IT slab, the only avenue left is the stock markets for earning a decent return. People will come eventually to the asset class which has potential higher returns, but a proper investment culture has to be built. New-comers have to come invest for the longer term, and not really bet for short term. First timers should ideally look at investing small amounts of money systematically, instead of bulk amounts which can cause panic in case of near term volatility. If all of this happens, I guess we will get a lot more local money to the markets and not rely on FII’s (foreign investors) to determine the market direction.


Give me some more negative votes, but remember truth is always bitter

True that FD rate is low there but so is the inflation which is around 0.2%,
In India the inflation rate has been above 8 % most of the times in the past few years which negates the returns for an Indian investor. Also there are so many MF schemes performing better than FDs.

Dude, what inflation, if u take inflation in real sense of world, it cannot negatate the returns of fds, ok , if u know mfs perform better , why the suck u are asking questions here, go and buy mfs

Nishant, the safest fund out there the Nifty ETF has given a return (CAGR) of 16.3% for the last 10 years, whereas an FD has given only 9%. When invested in the stock markets for more than 1 year, there is no tax you have to pay on the gain. In FD you have to pay taxes as per your slab. So if you had put 1 lk 10 years back in FD, you would have around 2lks after taxes (assuming 20% slab), if you had put it in Nifty ETF it would be closer to 7lks. So yeah, your statement is not really right, stock markets would have made more money than FD in any 5 year period from the time stock exchange came into play. But yes, there could be 1 to 3 year periods when going is not good at the stock markets when FD’s outperform. (Remember that most mutual funds have outperformed the Nifty ETF).

On a related topic, a very well written article on ET: