Investors Think Safe, but Act Bold: MyFi Report Exposes Risk Tolerance Mismatch

Bengaluru, 27th November 2024: AI-powered wealth management platform, MyFi, has released a comprehensive report that offers unique insights into the investment behaviours of over 7,000+ users across different age groups, income levels, and geographic locations. These findings provide a valuable understanding of how users across India manage risk in their investment portfolios, highlighting key trends and opportunities. Through a comparative analysis, the report examines how these factors shape distinct investment preferences across the country.

With India’s active mutual fund investor base now exceeding 50 million, according to AMFI, the country’s financial landscape is undergoing a significant transformation. MyFi’s data reaffirms expected trends, such as younger investors favouring high-growth, high-risk assets and older investors prioritising wealth preservation.

However, the report highlights a key behavioural insight: many users initially classify themselves as having low to medium risk tolerance during onboarding, yet their investment portfolios often lean toward higher-risk assets. This discrepancy reveals behavioural patterns influenced by ambition, peer influence, or market optimism, which may override initial perceptions. The findings show the need for enhanced financial education and intuitive tools to help users align their investment strategies with their true risk profiles and long-term goals.

Income and geographic data further contextualise these behaviours. High-income earners, with annual earnings exceeding ₹12 lakh, show a strong preference for high-risk investments, leveraging greater disposable income to pursue higher returns. Middle-income users (₹5-12 lakh) adopt a balanced approach with medium-risk investments, while lower-income groups (₹0-5 lakh) gravitate toward low-risk options, prioritising financial security.

Geographic trends reveal further nuances. Investors in Tier 1 cities like Bengaluru and Delhi favour medium-risk investments, reflecting a balanced approach. Meanwhile, Tier 2 cities such as Jaipur and Nagpur display a higher propensity for high-risk investments, potentially driven by entrepreneurial ecosystems, changing socio-economic dynamics or stronger aspirations of wealth creation. A difference in financial education may also play a key role here.

“Our mission has always been to create better wealth outcomes for more people,” said Kiran Nambiar, CEO, MyFi. “This key insight about the gap between perceived and actual risk tolerance highlights the importance of bridging behavioural and knowledge gaps. By leveraging AI and data-driven insights to personalise the experience, MyFi is simplifying investment decisions and democratising wealth-creation opportunities for all Indians, regardless of their financial background.”

These findings highlight the complexity of India’s investment landscape, where expected trends coexist with nuanced behavioural shifts. By providing personalised insights and easy-to-use tools, MyFi aims to address these gaps, helping users make more informed decisions that align with their financial aspirations.