Domestic Financial assets growth
The world has turned topsy turvy due to the outbreak of the COVID-19 pandemic, but the financial wealth of India showed growth. According to a new report by Boston Consulting Group (BCG), India’s financial wealth grew from 11% p.a. to $3.4 trillion. By 2025, It is expected to grow by 10% p.a. to $5.5 trillion. The report shows growth in prosperity wealth which is likely to expand in the next 5 years.
The report, titled “Global Wealth 2021: When Clients Take the Lead,” said India accounted for 6.5% of the region’s financial assets in 2020. 13.7% was real assets for the region, growing from 2015 to 2020. 12.1% pa to $12.4 trillion Debt is growing at a CAGR of 13.3% Debt is projected to grow at a CAGR of 9.4% to $0.9 trillion Reaching $1.3 trillion by 2025 Bonds are projected to grow the fastest at 15.1% pa Life insurance and annuities are the third-largest asset class going forward.
“The next five years have the potential to usher in a wave of prosperity for individuals and wealth managers alike,” said Ashish Garg, a member of Boston Consulting Group’s Center for Digital Government and a core member of the Financial Institutions and Public Sector Practices.
The report shows that North America, Asia (excluding Japan), and Western Europe will become the main sources of global financial wealth, accounting for 87% of the new growth in global financial wealth by 2025.
As part of this trend, real assets, which are driven primarily by ownership of the real estate, hit an all-time high of $235 trillion. Many wealth management clients in 2020 have moved away from lower-yielding bonds, embracing higher-yielding alternative investments.
The region having the largest concentration of wealth in real assets with $84 trillion, 64% of the regional total, Asia is projected to see growth in financial assets outpace growth in real assets (7.9% vs. 6.7%) over the next few years. Investment funds will become the fastest-growing class of financial assets in the region, with an estimated compound annual growth rate (CAGR) of 11.6% by 2025.