Gen Z Investing Paradox: Risk-Averse Despite High Awareness, SEBI Survey Shows

India’s youngest investors are shaping the country’s retail investing story, yet their behavior reveals a striking paradox. A recent survey by SEBI across 91,950 households highlights that while Gen Z is digitally savvy and highly aware of financial products, the majority remain cautious, prioritizing capital preservation over aggressive returns.

Market Performance

The data underscores how the surge in demat accounts and retail participation is not fully translating into active market engagement. Despite owning or accessing financial products, a significant proportion of investors stay on the sidelines.

• Demat account growth: Over 190 million accounts as of April 2025, a 280% jump since December 2020.
• Active vs dormant investors: Only 60% of Gen Z investors are actively trading, while 40% remain dormant.

This illustrates a disconnect between digital adoption and risk appetite.

Main Findings from SEBI Survey

The survey identifies Gen Z (aged 18–28) as a “high intention + high knowledge” cohort, demonstrating both curiosity and readiness to explore investments. However, their cautious approach shows in their limited exposure to high-risk products.

• Market penetration: 15% in urban areas vs 6% in rural regions.
• State-wise penetration: Delhi leads at 20.7%, Maharashtra at 17%, Goa at 15.5%; Nagaland and Meghalaya lag at 3–4%.
• Product awareness:
  • Mutual Funds & ETFs: 53%
  • Stocks: 49%
  • Other products (F&O, REITs, AIFs, corporate bonds): <1%

Even as awareness grows, actual adoption remains modest.

Intenders and Dormant Investors

The survey further reveals a nuanced landscape of investor intentions:

• Non-investors who are intenders: 22% plan to enter markets within the next year.
• Dormant investors: 40% of Gen Z investors are inactive despite having accounts.
• Lapsers: About 8% exited due to market performance or personal needs; 75% of these plan to re-enter.

Complexity, fear of losses, and trust gaps remain the largest barriers to participation.

Digital Influence and Learning

Digital platforms are playing a key role in shaping Gen Z’s investment journey:

• YouTube: Drives discovery for 91% of Gen Z investors.
• Following finfluencers: 56% of Gen Z follow financial influencers; 93% find them credible.
• Formal education: Less than 1% of households have attended structured investor education, though 70% who did found it useful.

The survey reflects a generation open to learning but hesitant to take risks without guidance.

Summary

SEBI’s latest survey paints a picture of a cautious yet aware Gen Z investor base. While digital adoption has accelerated awareness and account creation, the majority of young investors remain risk-averse, focusing on preserving capital. Urban penetration leads growth, but overall market participation and product adoption still have significant room to expand.