INDIA’S INVESTING PROBLEM IS NO LONGER INFORMATION—IT’S BEHAVIOURAL BIAS

Most Indians do not struggle with money for lack of information.

- HARDEEP SINGH MUNDI & SIMARJEET SINGH

They struggle because acting on that information—consistently over long periods—is harder than it appears.Ask anyone whether they should start investing early, run SIPs or raise contributions as income rises, and the answer will be yes. Yet, millions delay starting, pause SIPs, or fail to step up investments. The gap between intention and action remains one of the biggest challenges in household finance.

The data makes it clear. SIP inflows have grown steadily, crossing ₹17,000 crore a month in 2024. But, stoppage ratios remain high, often exceeding 50% during volatile periods. This suggests that while more investors are entering, many struggle to stay the course. Knowledge has improved; behaviour has not kept pace.

Present bias: and behavioural finance: Humans prefer immediate rewards. Spending today feels tangible; saving for retirement feels abstract. This “present bias” appears in familiar investor behaviour—waiting for market corrections, planning to start a SIP after bonuses, or promising to invest more once EMIs reduce. In reality, the future rarely arrives on schedule. This is not a discipline problem; it is cognitive. When decisions are viewed from a distance, logic dominates. But when the moment arrives, emotions take over. The comfort of spending often outweighs the long-term benefits of compounding.