Aiming to build long term wealth? Experts suggest these steps to build financial capability
India is set to add 10 crore long-term investors by 2035 as wealth creation expands to tier 2 and 3 cities, according to EY India's ‘Wealth inclusion in India: Expanding investor participation beyond metros’ report.
It further noted the untapped potential: India currently has over 55 crore active UPI users, compared to the 6.2 crore mutual fund investors and about 5 crore active equity market participants. “The gap indicates that while digital access has scaled rapidly, broad-based wealth participation is still at an early stage,” it stated.
Given the potential, the report added that for India's wealth inclusion agenda, expanding participation could require more than creating awareness of investment products. “It could require helping investors make better decisions at every stage of their financial journey,” moving from financial literacy to financial capability.
The report noted that for long, financial literacy has been viewed as the primary solution to low investor participation by governments, regulators and financial institutions. And while initiatives such as awareness campaigns, educational content and investor education programs have played an important role in expanding awareness, this has not consistently translated into participation.
“Many households understand the importance of investing yet delay getting started. Many investors … discontinue SIPs during periods of market volatility... The challenge therefore extends beyond knowledge,” it added.
As per EY, the gap between awareness and action remains one of the most persistent barriers to wealth creation. “Understanding a financial concept does not necessarily mean an investor can apply that concept when faced with uncertainty, competing priorities or emotionally charged decisions,” it felt.
So, what steps should investors who aim to build long term wealth, take in order to gain financial capability? Here's what it suggested:
- The report noted that capability extends beyond education and incorporates confidence, judgment, context and behavior. “It reflects an investor's ability to make informed decisions, navigate uncertainty and remain aligned with long-term financial goals,” it added.
- Different investors require different forms of support at different stages of their journey — confidence for beginners, encouragement for new SIP investors, insights for emerging participants, and tax and succession planning guidance for a mature investor.
According to the report, an effective capability framework should answer three questions whenever an investor faces a meaningful decision:
- What does this mean for me?
- What should I consider next?
- What risks should I understand before acting?
The report stressed that financial capability should be measured through observable outcomes: whether investors initiate appropriate investments, persist through market cycles, diversify portfolios, progress toward goals and improve retirement readiness and financial resilience. Here's a stepwise guide:
| From literacy to capability | |||
|---|---|---|---|
| Investor stage | Investor question | Capability intervention | Desired outcome |
| Awareness | Why should I invest? | Goal-led education, social proof and simple language | Relevance and intent |
| First action | Where should I begin? | Guided onboarding, risk explanation and simple entry portfolios | Confident first investment |
| Habit formation | How do I continue? | SIP nudges, step-up prompts and mandate recovery | Persistence |
| Volatility response | Should I stop or continue? | Goal impact, downside explanation and human support | Behavioral resilience |
| Portfolio review | Is my portfolio still suitable? | Diagnostics, rebalancing and advisor escalation | Better portfolio quality |
| Wealth progression | How should my wealth evolve? | Retirement, tax, protection and succession planning | Long-term financial resilience |
| Source: EY India |
Jocelyn Fernandes is a journalist and editor with nearly 13 years of experience covering the business, corporate, economy and markets beats in news.<br> As chief content producer for around three years at Livemint (Hindustan Times), Jocelyn publishes breaking stories, explainers, features and live blogs on a range of business and economy topics, including the Budget, corporate developments, stock markets, income tax, money and personal finance, cryptocurrency, government policy, impact of US tariffs, international developments and more.<br> Jocelyn's writing philosophy is focused on delivering news in an accurate and accessible format for readers. She thus focuses her news coverage on explainers and FAQs in order to breakdown business, corporate, economic, and policy topics that are of importance to everyday readers.<br> She holds a Bachelors in Mass Media (BMM) and Post Graduate Diploma (PGD) in Journalism and Communication and has previously written for online business and markets news site Moneycontrol (Network18), Business-to-business (B2B) trade publications — the industry magazines Power Today and Solar Today (ASAPP Media), and the national news agency United News of India (UNI).<br> Outside of work, Jocelyn keeps up-to-date with local and international news, enjoys reading fiction books, novels and short stories, and enjoys movies, travelling and art. <br> She can be found on X and LinkedIn, and reached by email: <a href="jocelyn.fernandes@htdigital.in">jocelyn.fernandes@htdigital.in</a> <br> X/ Twitter handle: <a href="https://x.com/scribeJocelyn">@scribeJocelyn</a> <br> LinkedIn: <a href="https://in.linkedin.com/in/jocelyn-fernandes-journalist">LinkedIn</a>
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