The Decline of FDs and the Rise of New Investment Mediums
“Fixed deposits (FDs) are not giving the main character energy anymore,” says Bhagyashree Bhansali as she opens the discussion. A couple of decades ago, FDs were considered a foolproof way to grow wealth, with high interest rates in the mid-90s. Today, however, they have slumped now, leading many to abandon them in favour of more dynamic investment options.
Sayali, founder of FinCocktail, attributes this shift to financial literacy and evolving investment opportunities. “After 1991, the economy was just opening up, and people had limited financial instruments. Fixed deposits were a safe and simple choice. But now, with the exposure we have and the government’s push for mutual funds, people are looking beyond FDs, especially with rising inflation.”
Anuj Singhal, Managing Editor of CNBC Awaaz, points out another major flaw: taxation. “With FDs, you receive interest later but pay taxes in advance. That’s a key reason why people are moving away from them.” COVID-19 also played a role in making people more aware of stock markets, accelerating the shift from traditional savings methods to modern investments.
Mindset Shifts: The Risk Economy and the “F*** You Fund”
Yes, there is something called that! Investment is no longer just about playing safe; it’s about financial freedom. Sayali notes how career choices have evolved over generations. “My grandparents had government jobs for stability. My parents took a leap into private jobs. And I started with a job but transitioned into an entrepreneurial role. This shift has been constant across generations.”
Anuj echoes this sentiment, sharing a personal perspective. “My father told me he would support me until I finished my education. But I’ve told my daughters, ‘Do whatever you want, I am here for you.”
Gen Z and Gen Alpha have financial security that previous generations didn’t. But does that mean they value money the same way? Anuj doesn’t think so. “We grew up with a scarcity mindset; that’s not the case with today’s generation.” He argues that while financial independence is great, too much money too soon can be risky, especially for young teens making substantial earnings.
Gen Z’s Relationship with Money and the Influence of Social Media
As social media exposes younger audiences to financial discussions, are influencers helping or misleading them? Bhagyashree asks Sayali if she tailors content specifically for teenagers. Sayali responds, “Our general audience is between 25-35 years of age.”
Anuj, representing traditional media, admits that he doesn’t target 13 or 14-year-olds. “Just because they are a larger audience doesn’t mean I create content for them.” However, younger generations are still exposed to investment trends online, often consuming advice from influencers whose content appears more appealing rather than being based on financial credibility.
The Investment Trends Shaping the Future
So where is the money flowing now? According to Anuj, “Mostly equities, crypto, and commodity trading. Crypto is taking off in a big way, largely influenced by the American market.”
But with the rise of digital investment avenues, regulations are tightening. Bhagyashree questions the effectiveness of Securities and Exchange Board of India (SEBI)’s move to register financial influencers. Sayali is sceptical. “Yes, SEBI is introducing rules, but how many influencers are actually following them? And consumers—are they choosing credible sources or just going for viral and entertaining content?”
The Path to Financial Freedom: What Should Gen Z Do?
With India on track to becoming the world’s largest economy in the next 50 years, financial habits today will shape wealth creation in the future. Anuj strongly advises buying property. “If you want to build an asset, buy a house. I feel financially secure because I bought a house long ago.”
Sayali adds a practical spending hack: “The 30-day rule—if you see an ad and want to buy something, add it to your cart but don’t purchase it immediately. Wait 30 days. If you still want it, then buy it. If you forget about it, you never needed it.”
Investing Early: Advice from the Experts
A Gen Z guest on the podcast shared his dilemma. “I just got my first salary, but I don’t know where to invest. YouTube and influencers give different opinions, and I’m confused.”
Anuj simplifies it: “Maximise your EPF and PPF first. Once you’ve secured those, then go full equity. By the time you’re 15-20 years into a job, you’ll realise the power of starting early.”
Is Gen Z Really Killing Traditional Investment?
Gen Z isn’t killing traditional investments; they’re reshaping them. Fixed deposits are no longer attractive because they don’t keep up with inflation or offer tax advantages. Instead, equities, crypto, and alternative investments are becoming mainstream. However, with easy access to financial information (and misinformation), young investors must navigate carefully, prioritising financial literacy over flashy trends.
At the end of the day, the core principle remains unchanged: Start early, stay consistent, and diversify wisely.
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Watch the full episode on YouTube https://youtu.be/onrESifihsQ?si=qXHpBnYPm7wAPckn
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